It was a dark easter for two of the three founders of Centra Tech Inc., who got arrested on Sunday by Federal authorities. Prosecuting the case is the US Securities and Exchange Commission (SEC) which is charging Sohrab Sharma and Robert Farkas with organizing a fraudulent initial coin offering (ICO). SEC had previously subpoenaed around 80 companies with involvement in ICOs.

In the SEC’s charge against Sharma and Farkas for violating anti-fraud and registration provisions of federal securities laws, the SEC is seeking the following:

Permanent injunctions halting the token sale. A return of all gains, including interest and penalties. Barring of Sharma and Farkas from serving as public company officers or directors. Barring of Sharma and Farkas from participating in any offering of securities, digital or otherwise.

In a press release published yesterday, the Co-Director of the SEC’s Division of Enforcement, Stephanie Avakian, said of the charges:

“We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses. As the complaint alleges, these and other claims were simply false.”

According to the SEC, the $32 million raised through the sale of unregistered investments dubbed “CTR Token” was illegal. One of the cofounders, Farkas was arrested just before his planned escape out of the country. There is however no news about the arrest of the third cofounder, Raymond Trapani.

In addition, the founders of Central sought to increase hype by announcing fictitious partnerships with well known established brands. A notable example is their claim of being in partnership with Visa and MasterCard in order to give token buyers a debit card which can be used to convert crypto-assets to fiat instantaneously and other bogus financial services claims.

Investigations by SEC further revealed that the executives placed on the website as “team members” were in fact non-existing persons. These fictitious persons were given a perfect profile with impressive work experience in order to sway investors. This is while also pushing to the public “false and misleading” marketing and promotional materials.

To cap it all, the founders paid the boxing champion celebrity, Floyd Mayweather, to endorse and promote the token sale. Mayweather did this in an Instagram post which he has long since taken down. This brings to mind SEC’s caution regarding celebrity endorsements, that they could be liable for violation of “anti-touting law” when promoting a token sale, if it is an unregistered security or their compensation is not disclosed.

As the news broke on the markets the price plunged 70%: