Centra (cryptocurrency)

Centra was a blockchain-based product line solution that aimed to create a world connected to cryptocurrency. The solutions the company was working on included platforms to connect commerce to cryptocurrency through the Centra Cards. These cards were intended to allow users to spend their cryptocurrency in all fiat currency transactions to create a bridge between cryptocurrencies and everyday transactions. Further, the company stated it was working on a Currency Conversion Engine (CCE) module to enable users to convert blockchain assets to market value fiat for near-perfect exchange rates. These products were made available on the iOS App Store, Google Play Store, and on desktop.

Centra was cofounded in 2016 by Raymond Trapani, Sohrab "Sam" Sharma, and Robert Farkas. The founders held various titles and roles, with Robert Farkas holding chief marketing officer and chief operating officer roles, Sohrab Sharma holding chief technology officer and president roles, and Raymond Trapani holding various other roles. The three cofounders met while working at a luxury car rental company in Florida called Miami Exotics.

The company was led by a fake chief executive officer (CEO) named "Michael Edwards" and used an image of University of Manitoba professor Andrew Halayko to create fake online profiles for the company.

On April 20, 2018 the founder of Centra, Raymond Trapani, Sohrab Sharma, and Robert Farkas, were arrested and charged by the US Department of Justice's (DOJ) for securities and wire fraud after the completion of Centra's fraudulent initial coin offering (ICO). The arrests and charges were the result of the founders claiming the Centra debit card was backed by Visa and Mastercard and would allow users to convert cryptocurrencies into fiat currencies. This partnership claim turned out to be false, according to the US Securities and Exchange Commission.

The ICO for Centra raised $32 million from investors and claimed to have 'big-name partnerships and celebrity endorsements, including online endorsements from Floyd Mayweather and DJ Khaled. At the time of their ICO, Centra stated on their website they were creating “the world’s first multi-blockchain debit card and smart and insured wallet,” and their company would link each user's cryptocurrency wallet to debit and credit cards to provide insurance coverage for their stored assets by having partnership agreements with both Mastercard and Visa. The company also claimed its cryptocurrency wallet was compatible with five major cryptocurrencies, including Bitcoin, Ethereum, and Litecoin.

Nathaniel Popper of the New York Times began to investigate Centra Tech and was the first to reveal significant lapses in the company's claims, including the LinkedIn profiles with faked credentials (such as the imaginary CEO) and false claims of partnerships with major financial institutions, such as Bancorp, Visa, and Mastercard, and the alleged licenses in thirty-eight states. This reporting by Popper triggered a cascade of investigations on the part of the SEC.

The investigation triggered through the New York Times reporting led to an investigation on behalf of the U.S. Securities and Exchange Commission (SEC), which halted the initial coin offering (ICO) of the CTR token. The SEC alleged Centra had engaged in fraud by selling "unregistered securities," which were promoted by celebrities paid to endorse the product, all in order to "orchestrate a fraudulent initial coin offering." Following the halting of the ICO, all three co-founders of Centra were charged with counts of conspiracy and the commission of securities and wire fraud by the SEC, and the Justice Department opened its own separate investigation into the three cofounders, which led to the arrest of Sohrab Sharma and Robert Farkas on charges of fraud.

As part of the legal proceedings of the allegations of fraud, a magistrate judge of the Southern District of Florida, Judge Andrea Simonton, had to decide whether a crypto token is a security. This comes as a large part of the case, especially the SEC's case, relies on the interpretation of a crypto token as the same as a security. The judge found, in a detailed explanation, that the Centra token demonstrated different aspects of a security as understood by existing law. And while the report did not set a binding precedent for similar cases, the report is available to other legal battles when asking the question of whether a crypto token is a security or not.

It was announced on March 4, 2021, that Sohrab Sharma was sentenced to eight years in prison in connection to his role with Centra, which was characterized by the U.S. Attorney's Office as a "scheme to induce victims to invest more than $25 million worth of digital funds in Centra". Further to the charges, Sohrab Sharma was sentenced to three years of supervised release and ordered to pay a fine of $20,000 and forfeit $36,088,960.

This came after Sharma had previously pled guilty to conspiring to commit securities fraud, wire fraud, and mail fraud in connection with his and his co-conspirator's use of material misrepresentations and omissions to solicit purchases of those securities. More specifically, Sharma pled guilty to using inventions including fake executives, fake business partnerships, and fake licenses to trick victims into investing in a fraudulent financial product.

On December 15, 2020, it was announced Robert Farkas was sentenced to one year and one day in prison in connection to his role with Centra, and participation in the scheme to induce victims to invest in a fraudulent product. Further to jail time, Farkas was sentenced to three years of supervised release and ordered to forfeit $347,062.58 and a Rolex deemed to have been purchased with proceedings from the fraud. This came after Farkas had pled guilty to conspiring to commit securities and wire fraud.

Raymond Trapani was charged alongside the Centra cofounders with violating the anti-fraud and registration of the federal securities laws. Similar to Farkas and Sharma, Trapani was charged with one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, one count of securities fraud, and one count of wire fraud. And, similar to his peers, Trapani pled guilty to the charges placed before him. However, despite being ordered by the court to pay back $2.9 million, Trapani did not face any jail time. Rather, at the time of his sentencing, the judge cited Trapani's "extraordinary" cooperation in the criminal investigation as to a reason why he faced no jail time.

In January 2024, Netflix released a documentary called Bitconned from director Bryan Storkel, which looked inside the cryptocurrency craze of 2017 and the story of Centra. As part of the documentary, Ray Trapani was interviewed about his part in the cryptocurrency craze of this period and in the Centra scheme. Through interviews, Trapani describes himself as a scammer and one who had always wanted to be a criminal, going as far as detailing his selling of prescription drugs (through means of a stolen prescription pad), before founding a legitimate luxury and exotic vehicle rental company, which was threatened by rampant spending, mounting debts, and shady business expenditures, before the opportunity was sought in cryptocurrency to develop a scheme to make money.

Further, through the documentary, Trapani reveals through interviews that the cofounders were inspired by Singapore-based TenX, going as far as copying the TenX website verbatim and replacing each mention of TenX with Centra. The founders then created bogus biographies for themselves, which included fraudulent degrees and fraudulent experiences at Wall Street investment banks, all to make themselves look as intelligent as possible and make Centra look as legitimate as possible.

In the documentary, cofounder Robert Farkas was also interviewed and able to tell a portion of his version of the Centra story. He noted his displeasure that Trapani was not sentenced to any jail time and further questioned the judge's praise of his former colleague. However, Sohrab Sharma was not able to take part in the Bitconned documentary, as he was still incarcerated at the time. Through a statement provided by his attorney, Sharma denies various claims made by the documentary and further looked forward to being able to tell his side of the story of Centra and its background.