According to a recent report by TMZ, undefeated boxing legend Floyd Mayweather and hip-hop producer DJ Khaled are being sued for their apparent involvement with Centra Tech — an alleged cryptocurrency scam.
The company sold a total of $32 million worth of its Centra Tech (CTR) tokens, with claims that the funds would be used for the development of a cryptocurrency backed credit card and online marketplace called cBay. During its initial coin offering (ICO), the company claimed its CTR tokens were utility tokens with functionality only within its own ecosystem and that both token and Centra cardholders would receive cash back from their purchases.
On June 25, 2018, the U.S. District Court of the Southern District of Florida released a report stating that the tokens sold by Centra Tech were, in fact, security tokens, but the ICO was not registered with the Securities and Exchange Commission (SEC). According to the report, Centra Tech’s CTR passed the Howey Test — a test the SEC uses to determine whether a transaction constitutes an investment contract.
The three founders of the project — Raymond Trapani, Robert Farkas, and Sohrab Sharma — were arrested in April 2018. Following the arrest, the coin was immediately delisted from several exchanges, including OKEx and Binance, leaving holders unable to liquidate their holdings.
Mayweather and Khaled both helped to promote the scam last year to their extensive social media following, with Mayweather urging viewers to participate in the [then] upcoming ICO, whilst Khaled announced he just received Centra Titanium debit card. Mayweather also expressed excitement about using Centra Tech, stating in on Twitter.
— Floyd Mayweather (@FloydMayweather) September 18, 2017
— DJ KHALED (@djkhaled) September 27, 2017
According to TMZ, Khaled and Mayweather are both named in a class-action lawsuit against Centra Tech, as it appears that both celebrities signed deals to help promote the ICO as brand ambassadors.
The investors are now looking to reclaim their money, plus additional damages, following the arrest of the project founders — money the suit states was raised in part due to its celebrity endorsements.
Do you think Mayweather and Khalid should be liable for damages? What do you think should be done with celebrities who unwittingly endorse scam projects? Let us know in the comments!