Retired boxer Floyd Mayweather Jr. along with producer DJ Khaled are both in a heap of trouble due to a major lawsuit brought against them by investors who were ripped off by a cryptocurrency scam created by a company called Centra Tech.
Mayweather and Khaled gave their public celebrity endorsement for the fake Centra cryptocurrency system. Mayweather promoted Centra’s initial coin offering (ICO) to his millions of followers on social media by encouraging them during September 2018, to buy the Centra cryptocurrency.
Blockchain Reporter said that Centra was marketed as being a system that worked with many cryptocurrencies in partnership with MasterCard and Visa. Supposedly, owners of the Centra cryptocurrency would be able to make purchases using Centra MasterCard and Visa debit cards at over 36 million global merchants. The first sign of a serious problem with the company was that those MasterCard and Visa debit cards were never issued.
When Centra went bankrupt, after raising around $32 million from its ICO, Centra’s founders, Sohrab “Sam” Sharma and Robert Farkas, were sued by the Securities and Exchange Commission (SEC). The SEC alleges in the lawsuit that the claims made by Centra that the company had deals with MasterCard and Visa were false. Moreover, the SEC says that the executive team listed on the company’s website did not exist. The SEC also alleges that the company’s founders manipulated the price of the Centra cryptocurrency to defraud investors while illegally selling it as an unregistered security.
After the lawsuit was filed against them by the SEC in federal court in New York, the SEC also filed criminal charges against the founders. Farkas was caught and arrested trying to board an airplane to flee the United States. Farkas and Sharma were charged with securities fraud, conspiracy, wire fraud, and other criminal charges. Finance Magnates reported that later a third defendant, Raymond Trapani, was arrested. The SEC claims that Trapani was the secret mastermind behind the whole scam.
Neither Khaled or Mayweather appears to be facing criminal charges over the Centra case; however, the SEC has clearly stated that celebrities are not shielded from legal action against them when they promote fraudulent investments.
Investors may have a difficult time getting their money back because the founders of Centra squandered the $32 million that they raised. The only hope for investors is that they can squeeze money from a settlement or an award that comes from the class action lawsuit naming Mayweather and Khaled.
Mayweather received over $100 million from his last major fight. Nevertheless, he owes the IRS over $23 million in back taxes and declared to the IRS that he is not able to pay it. This means any clams against Mayweather will have to wait until after he pays the IRS.