The suit was filed by individuals who lost their money by investing in the Centra Tech initial coin offering. The two celebrities prominently endorsed the Centra Tech ICO on social media platforms with Khaled calling it a ‘game changer’ while Floyd nicknamed himself ‘Floyd Crypto Mayweather’.
The plaintiffs claim that partly as a result of the efforts put in by Mayweather and Khaled, Centra Tech managed to raise approximately US$32 million in the ICO which was floated last year. The plaintiffs are now seeking to be compensated for their losses plus damages by the founders of Centra Tech and the celebrity endorsers and promoters.
This lawsuit now raises the stakes for the founders of Centra Tech who were indicted with four counts of fraud. The four counts are securities fraud, conspiracy to commit securities fraud, wire fraud and conspiracy to commit wire fraud. They were indicted in May this 2018 by the U.S. Attorney’s Office for the Southern District of New York.
In the indictment citation, the operators and founders of Centra Tech, Raymond Trapani, Robert Farkas and Sohrab Sharma were accused of making material omissions and misstatements with a view of deceiving investors:
“…the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market. They allegedly made false claims about their product and about relationships they had with credible financial institutions…”