As far as ICO operations go, many rely primarily on aggressive online advertising to gain customers. However some have seen the effectiveness of celebrity endorsements as the Centra Tech ICO garnered well over $32 million despite misleading clients with regards to industry connections as discovered by the SEC.
The ICO was promoted by the likes of Floyd Mayweather and even DJ Khaled using various social media platforms including Twitter. As seen below, the boxing heavy weight publicly promoted the ICO despite hiding the fact he was paid for the endorsements. The legal issues which come with this practice are yet to be set in stone as the SEC failed to indict the celebs for their involvement.
Both the founders were arrested on the first of April as company bank accounts were emptied and Farkas attempted to escape abroad.
“We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. “As the complaint alleges, these and other claims were simply false.”
To conclude, the SEC in the US has filed charges against the founders of Centra including Sohrab “Sam” Sharma and Robert Farkas. It became apparent that celebrity endorsements had fooled many new investors as many had not performed detailed research into the corporation behind the token itself. The false claims of connections with market leading payment processors including MasterCard and visa were uncovered as the company carried on marketing using these claims despite the mentioned companies sending legal documentation to prevent these fake endorsements.
Always carry out detailed background checks if you do want to invest in a ICO. While presenting great opportunities for profit and the chance to invest in future technologies, the current market is full of fraudulent and fake ICO’s as developers and criminals aim to part you from your money. Please invest responsibly as losses can exceed deposits.