29 April 2018

US Corporate Law News: SEC charges third defendant in fraudulent initial coin offering (ICO) scheme

On April 20, 2018, the SEC announced fraud charges against a co-founder of Centra Tech Inc., in a fraudulent scheme related to its $32 million initial coin offering (ICO) in 2017. The SEC had previously brought criminal proceedings against that company's two other co-founders. With high-profile celebrity endorsements, the company had boasted cutting-edge technology and backing from Visa and MasterCard to launch a cryptocurrency debit card that could be used at stores like a credit card. The SEC alleged that the founders had gone to great lengths to fabricate a false impression of their business by creating misleading market materials (including touting impressive yet fictional executive biographies) to lure investors. In its new complaint, the SEC is seeking the return of funds and permanent injunctions against the third co-founder to prohibit him from serving as an officer or director in any public company and from participating in any offering of digital or other securities. For more information, see https://www.sec.gov/news/press-release/2018-70.