Lawsuit targets ICO, promoted by Mayweather and DJ Khaled

Centra ICO, the startup, created to launch cryptocurrency deposit cards, is accused in offering and selling unregistered securities
18 December 2017   566

Against the ICO project Centra a collective lawsuit of depositors was filed. The ICO is known to by promoted by famous boxer Floyd Mayweather and producer DJ Khaled. The project is accused of violating the US Securities Act, CoinDesk reports.

Defendants of the suit, which was filed on December 13, are Centra Tech, as well as Sohrab Sharma, Raymond Trapani, Robert Farkas and William Hagner. During the tokensale, they managed to raise $ 30 million to issue a crypto-currency debit card.

As the newspaper notes, the claim was filed a month after the project was abandoned by its two founders. In a post published on the Centra Tech blog on October 31, it says that Sohrab Sharma and Raymond Trapani left the project after the end of the tokensale.

...in connection with Centra Initial Coin Offering (the "Centra ICO"), Defendants raised over $30 million in digital cryptocurrencies by offering and selling unregistered securities in direct violation of the Securities Act.
 

Levi & Korsinsky Lawsuit

In addition, the organizers of Centra ICO are charged with misleading investors about the company's relationship with the payment services Visa and Mastercard, as well as in posting false information about its members on its website.

ICO Centra was actively promoted by boxer Floyd Mayweather and music producer DJ Khaled, but later they removed their messages on social networks. In this case, neither Mayweather nor DJ Khaled in the suit appear.

DJ Khaled Centra Promotion
DJ Khaled Centra Promotion
Floyd Mayweather
Floyd Mayweather Centra Promotion
 

In its last statement, Centra company denies all accusations in its address.

This lawsuit, which for the most part, appears to repeat unfounded claims regarding Centra Tech, alleges that Centra Tech’s initial coin offering of Centra Tokens was an unregistered sale of securities. The plaintiff’s complaint attempts to mimic claims and allegations the Securities and Exchange Commission has lodged against other cryptocurrency offerors. Centra Tech disputes the allegations in the complaint.
 

Centra ICO Statement

According to Coindesk team, a representative for Mayweather did not immediately respond to a request for comment.

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Swiss Regulators Published ICO Guidelines

The Swiss Financial Market Supervisory Authority FINMA published today initial coin offering (ICO) guidelines  
16 February 2018   156

The guidelines set out how it intends to apply financial market legislation in handling inquiries from ICO organizers. According to it, regulators will oversee and regulate ICOs anti-money laundering laws.

FINMA clarifies how token issuers should proceed in the country. The regulator also stated that there is a sharp increase in the number of Switzerland-based ICOs. This led to questions about applicable regulations.

The press release noted that financial market law and regulation aren’t applicable to all ICOs. Each case must be decided on its individual merits.

The regulations will be based on economic function and purpose of the tokens issued by the ICO organizer. Due to the fact that there is no generally recognized terminology for the classification of tokens in the world,  FINMA categorizes tokens into three types:

  • Payment tokens are synonymous with cryptocurrencies and have no further functions or links to other development projects.

  • Utility tokens are tokens which are intended to provide digital access to an application or service.

  • Asset tokens represent assets such as participation in real physical underlyings, companies, or earnings streams.  

FINMA will handle ICO inquiries according to three different categories, based on the type of tokens they’ll be issuing.

  • Payment ICOs (payment tokens), that issue tokens that are transferable and function as means of payment.

  • Utility ICOs (utility tokens), that will not qualify as securities, as long as their purpose is to confer digital access rights to an application or service. If a utility token functions as an investment in economic terms, it will be treated as a security.

  • Asset ICOs (asset tokens), that issue tokens that will be seen as securities. This means they’ll be treated like equities or bonds. These will be subject to strict requirements.

Our balanced approach to handling ICO projects and inquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.

Mark Branson

FINMA CEO