(Bloomberg) -- The co-founder of cryptocurrency firm Centra Tech Inc. was arrested on charges that he duped investors into committing more than $25 million to the company by lying about an initial coin offering.
Raymond Trapani's arrest on Friday follows charges against two other co-founders of the firm, Sohrab Sharma and Robert Farkas, who were arrested last month. All three men are accused of conspiracy, securities fraud and wire fraud, as well as civil claims by the U.S. Securities and Exchange Commission.
Authorities claim that Trapani, 27, Sharma, 26, and Farkas, 31, cheated investors by claiming to have developed a debit card allowing users to make purchases with digital currency at any business accepting Visa and Mastercard. The men also lied in offering materials about having a Harvard-educated chief executive officer and other aspects of their business, and they failed to register the coin offering, according to prosecutors.
"While investing in virtual currencies is legal, lying to deceive investors is not," Robert Khuzami, deputy U.S. Attorney for Manhattan, said Friday in a statement.
The trio founded Centra Tech after working at a luxury car rental company called "Miami Exotics" in Florida, according to prosecutors. They raised money rapidly with help from social media mentions by celebrities including boxer Floyd Mayweather and music producer DJ Khaled.
Lawyers for Trapani, Sharma and Farkas didn't immediately respond to requests for comment.
To contact the reporters on this story: Christie Smythe in Brooklyn at csmythe1@bloomberg.net, Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net.
To contact the editor responsible for this story: David Glovin at dglovin@bloomberg.net.
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