Fraud rap for cryptocurrency promoted by DJ Khaled, Mayweather

The US Securities and Exchange Commission has laid charges over a fraudulent cryptocurrency fundraiser that boxer Floyd Mayweather and rapper DJ Khaled touted on social media.

Neither celebrity is accused in the scheme which the SEC yesterday said raised more than USD 32 million from thousands of investors.

The SEC charged Sohrab "Sam" Sharma and Robert Farkas, co-founders of Centra Tech Inc, with violating the anti-fraud and registration provisions of US securities laws.

Initial Coin Offerings (ICOs) have sprung from nowhere to become a hugely popular way for start-ups to raise funds online, offering self-created digital "tokens" or coins to any willing buyer.

But regulators around the world have warned of the risks of fraud, the volatility of virtual currencies and the lack of clarity on what a "token" represents.

Sharma and Farkas are accused of masterminding a fraudulent ICO in which Centra offered and sold unregistered investments through a "CTR Token."
"Endorsements and glossy marketing materials are no substitute for the SEC's registration and disclosure requirements as well as diligence by investors."