ICO News: Investors Take Aim at Centra Tech

on Dec 18, 2017

While the most high-profile ICO-related class-action complaint was filed against Tezos, it’s not the only one. Buyers of the CTR token have filed a class-action lawsuit against US-based Centra Tech for allegedly not registering its token as a security. The move spotlights the point that the US SEC has been making about treating the tokens of upcoming ICOs as securities, but it’s seemingly the first in which investors have used the same complaint.

Centra Tech, which raised more than USD 30 million in its recent token sale and which is behind blockchain products including a wallet to store digital assets and a pre-paid card, has taken to its blog to defend itself. Their vision extends to the development of a marketplace for buying digital goods.

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“The plaintiff’s complaint attempts to mimic claims and allegations the Securities and Exchange Commission has lodged against other cryptocurrency offerors. Centra Tech disputes the allegations in the complaint,” according to Centra Tech. 

The investors, who filed the complaint in Florida, are seeking refunds from their purchase of the Centra Tech CTR tokens. The Centra Tech ICO unfolded earlier this year, and investors exchanged BTC, ETH and Litecoin for the new CTR cryptocurrency. Based on the details of the complaint, the buyers of the token didn’t perform their due diligence, instead pointing out the flaws of the founders of the startup for alleged past blemishes on their record and blaming them for the characterization of their digital token.

Deja Vu All Over Again 

If the Centra Tech ICO sounds familiar, that may be because it had the backing of boxing phenomenon Floyd Mayweather. Incidentally, the SEC has since come out warning investors that celebrity-backed upcoming ICOs promoted by celebrities could be illegal if the compensation details surrounding the partnership aren’t disclosed. Mayweather is not named in the complaint, though according to reports he was compensated for his endorsement of the ICO in cash. 

By some estimates, ICOs have raised more than USD 4 billion year-to-date.