Floyd “Money” Mayweather packs a powerful punch in the ring, and his endorsement of a brand packs an equally mighty punch. You would think any brand backed by Mayweather was legitimate and that it was a pretty safe deal. However, for a certain group of investors this couldn’t be further from the truth. In fact, the group of disgruntled investors is suing Mayweather and DJ Khaled over an ICO scam. The pair both tweeted promotional posts of an ICO that turned out to be fraudulent – taking well over $30 million from investors before the truth was revealed.
Exit Strategy Detected and Founders Arrested
Unfortunately for Centra Tech’s founders, their exit strategy was picked up by the US Securities and Exchange Commission (SEC) and the trio were arrested. Raymond Trapani, Sohrab Sharma, and Robert Farkas – Centra Tech’s founders – were arrested back in April 2018, and are now facing a minimum of five years in jail.
The Federal Bureau of Investigation (FBI) confiscated more than 91,000 Ethereum tokens – with a current market value of $18.5 million – from the trio. It is now likely that this will be liquidated in order to repay investors. At the time of arrest this hoard of Ether was worth considerably more, so the trio will still end up forking over a lot of cash out of pocket – a fair and justified punishment for the scammers.
Promotional ICO Tweets Not Going Down Well
Mayweather and DJ Khaled are just the latest celebs to endorse an ICO and have it to blow up in their faces. Cricket Legend Michael Clarke slogged through a tricky innings with disgruntled fans after he tweeted a promotional ICO post back in August. While Michael Clark managed to escape the ordeal without facing a lawsuit, celebs are being persecuted more than ever for supporting ICO projects – largely due to the unregulated “wild west” nature of the ICO universe.
ICOs Failing All Around
During the 2017 crypto boom, ICOs were the talk of the town, as everyone wanted a slice of the action. Unfortunately, the new year brought in a new trend for the crypto markets – the year of the bear. This has led to investors steering clear of crypto markets and even more so of ICO projects. With less investors piling cash into crypto tokens, more ICOs are failing than ever before. Investors are now demanding tougher regulations on ICOs to ensure that scams like Centra Tech never make it off the ground. Until the ICO space is more regulated, we could see this ICO slump continue to drag on.
Mayweather and DJ Khaled are yet to be served their papers, but the lawyers backing the investors are hard work to ensure they have an airtight case. The pair could be forced to repay everything they earnt for the tweets, plus more in damages. However, for the two superstars, they probably aren’t concerned one bit. Mayweather is linked to a fight with Khabib Nurmagomedov that could see a nine-figure purse and Khaled will undoubtedly release another track to make up his lost funds. When it comes down to it, lawsuit or otherwise, the only ones set to be left out of pocket are those that invested in Centra Tech’s scam ICO.