- Federal authorities proceed to press charges for a long jail term against Contra Tech’s Robert Fakras on the grounds of fraud ICO
- He admitted to swindling over 25 million dollars in 9 months in the year 2017
- The authorities hope that the court will imprison him for 80-87 months as many investors lost their funds.
Before U.S. District Judge Lorna Schofield, the federal authorities of the United States of America are calling for a long jail term to be imposed on one of Contra Tech’s owners. The company that was behind the infamous first coin offering which was heavily promoted by the former boxing champion, Floyd Mayweather and DJ Khaled in 2017.
What are Initial Coin Offerings?
Initial Coin Offerings (ICOs) provide a way for companies and start-ups to raise capital. The provider issues digital tokens through blockchain technology (an open and decentralised mechanism) so anyone with access to the internet and a digital wallet can buy these tokens. They are usually purchased with cryptocurrencies. There is a risk attached to using this method as they can be structured in a way that bypasses scrutiny of the appropriate authorities. Due to their unregulated status and the fact that the transactions remain anonymous, money laundering can occur.
Arguments of the Federal Authorities
The Federal authorities are seeking a long jail term to deter other fraudsters from committing unlawful ICOs. They wish for it to be a strong message to fraudsters to refrain from doing this as they will get caught and will have to pay hefty compensation and may also face jail time. It is also detrimental to honest coin issuers who are trying to raise capital through digital asset markets as it is a new mode of raising finance. The public may stop trusting the system of scams and frauds such as these keep happening.
Trial of Robert Joseph Fakras
Robert Joseph Fakras, the co-founder stated that he was guilty of swindling more than 25 million dollars in this manner from June till October 2017. He then requested that he be given home confinement and a large amount of community service as he believed that he did not play a major role in the crime and to also add the sentence time that he had already served which was 55 days. However, the prosecution disagreed and wanted 70-87 months of prison time as per federal rules and the probation officer recommended 60 months. This is because the fraud that Fakras committed for 9 months caused losses of millions of dollars to hundreds of investors who were victims of this act.
The company also lied about its licensing agreements with Visa, Mastercard and Bancorp so as to gain goodwill for its crypto debit card and ICO. Further, this was promoted by many celebrities as well.
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With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.