btc wires

An ICO Promoted by Mayweather is a Security, says a US Judge

The U.S. boxing legend Floyd Mayweather promotes an initial coin offering (ICO) token which is a security, as has been recently declared by a US district court judge.

Magistrate Judge Andrea Simonton made this judgment in a report related to a class action lawsuit against the operators of Centra Tech, which is a booming cryptocurrency startup whose $32 million ICO was shut down by the Securities and Exchange Commission (SEC).

Centra is being sued by investors and Mayweather is involved because its token sale was promoted on social media by him. They are being sued for selling unregistered securities, which is a crime under federal law.

This topic was not exactly disputed, as the defendants conceded that point, so far in the case. They have still reserved the right to challenge that classification in the future. Centra is instead arguing that the plaintiff lacks standing to bring the claim.

In a report written for the U.S. District Court of the Southern District of Florida, Judge Simonton claimed that Centra’s CTR token should be categorized as a security according to the “Howey Test,” a rubric which has been used in the US for decades to assess whether a particular asset is an “investment contract.”

This states that an asset is a security if it meets three conditions, which are, it has to be an investment, investors have to benefit from the company’s success, and the expectation of profit should come solely from the efforts of others (e.g. the company’s founders). According to Judge Simonton, CTR met all three of these conditions.

Centra Tech operators have been accused by the SEC of running an unregistered securities offering and also conducting fraudulent practices to sell their tokens. Regulators specifically accuse Centra of lying about their relationships with Visa, Mastercard, and other large financial institutions.

Charges have been filed against Centra Tech by the U.S. Attorney’s Office for the Southern District of New York and its three founders — Sohrab Sharma, Raymond Trapani, and Robert Farkas — all of whom have been arrested on the counts of securities fraud and wire fraud.

The SEC has issued a warning that celebrity ICO endorsements may be illegal, however, no legal action has been taken against such promoters.