Bitconned is a new documentary about a real life story of crypto scam and is available to stream on Netflix. You know how few critics of bitcoin and decentralized systems keep repeating "crypto is scam" or "bitcoin is scam" to discredit this revolutionary technology and movement for decentralization. While most of this critics are not completely honest in their association of genuine technology and scams in the crypto world, scams do happen in crypto world. Unfortunately, there has been many of them. Crypto doesn't hold monopoly when it comes to scams. Scams and fraud are more of a human phenomena, and opportunist will find ways to come up with various scams to defraud people. Bitconned explores one of these scam schemes, the scam of Centra Tech. It is very interesting, entertaining, and educational story. There are many topics within this story that are worthy of sharing, discussing, and spreading awareness.
Spoiler Alert: It is not easy to tell this story and discuss this documentary without spoilers. Documentary is well produced and is like watching a movie. For this reason, I wouldn't want to ruin it for you if you are planning to watch it. It is definitely better to see Bitconned without any prior knowledge of story. It keeps the viewer wondering how the story would end. Please stop reading here if you do not wish to see spoilers. Feel free to return to share your thoughts after watching the documentary.
I have been aware of bitcoin and crypto for a while now, but have never heard of Centra Tech and project founders (scammmers) before watching Bitconned. I am grateful that I never knew about them, and didn't fall victim of their scam. There are many lessons to be learned from this story, and makes me wonder how many scams we may have missed all while celebrating the success of decentralized systems in recent years.
The protagonist or villain of this story is Ray Trapani who is one of the founders of Centra Tech. The second founder and another main character of the story is Sohrab "Sam" Sharma. These two used to go to the same high school and never liked each other. For two of them come together, their common friend from high school plays a big role. Before Centra Tech, Ray Trapani had big dreams and was chasing easy and quick money. Ray and Sohrab's common friend had interest and knowledge of luxury cars and had an idea of creating a luxury cars rental company. Initially Ray gets involved in this new company called Miami exotic. Then Sam (Sohrab) is also brought in. Ray was involved in smaller scams before this. This was the time for Ray to run a legit business and make a lot of money. He convinces his grandfather and family members to invest in the company. According to the documentary they invested almost half a million dollars.
At this point I think it is important to note that the story is mainly told through Ray's perspective. He is the main player and takes up most of the interviews. Sam on the other hand hasn't shared his side of the story in this documentary. Sam in prison, and his lawyers said he will tell his side of the story at a later time.
Miami Exotic gets going, but not the way Ray or the crew expected. They did have money coming in, but they were spending more than they were making. Ray alleges that Sam was spending the most, and was forging company checks to steal money from the company. The business is failing. Ray is in despair, and mad at Sam. Unexpectedly, Sam comes to Ray with another idea. He tells Ray about bitcoin and crypto and how there are opportunities to make a lot of money. Ray is sold. These two decide to kick their friend who ran Miami Exotic out, and decides to start a new company together. Without their friend these two would probably would never have come together to do anything. This is where the story of Centra Tech story starts.
Ray and Sam literally come up with an idea how to scam people. They had zero knowledge of blockchain and crypto. They had no coding or business skills. They understood nothing about decentralized systems. All they wanted was to get as much money as they can buy creating a fake company with fake everything. They take the best idea in crypto, creating an ability for crypto users to use their assets as cash with credit card. Nothing original here, but much needed solution for crypto at the time and today. So idea is a great, it solves a big problem. There is huge demand. Unfortunately, it is not that easy to accomplish if someone truly wanted to come up with solution. There are regulatory, legal, network, and technical issues. Ray and Sam didn't care. All they had to do was to create an illusion that their company or project was tackling the problem.
They start stealing ideas from other projects. They found a crypto project with a similar idea. Hired freelancers to recreate the same exact website and whitepaper but changing the name to Centra Tech. The wouldn't be the first ones copying other projects and plagiarizing in their whitepaper. The problem is they had no intention, skills, or knowledge how to accomplish this. All they had to do is fake it. What they were planning to do was the ICO. ICOs where the money was. Everybody was throwing around money at ICOs without proper research or any evidence of product or potential delivery or products.
So they steal whitepaper and websites. They create fake background history, experiences, and education. They even add a made up person as their CEO, just to look like they were serious business and/or project. Everything seemed to look good. In the meantime they hire freelancer developers to build a blockchain as well, just in case. What if they actually solve something. ICO starts and coming starts coming in. Initially they was only tens of thousands received in ICO. But then something interesting happens, and all of the sudden number goes to a million and keeps going. Later they find out one of the crypto gurus or influencers mentions Centra Tech as project with a great potential and recommends investing in this ICO. Millions keeps coming in. Ray and Sam buy into their own illusion and start believing their own lies. They rent an office, hire people and start growing as a start up. Kinda. I am sure at some point they probably thought "what if we actually do what we were thinking to do". Nah, not happening. They obsessed with money, not with solution.
This growth catches the attention of one of the journalists at New York Times, who is very skeptical of Centra Tech and senses something is really wrong with this company. This journalist does end up uncovering the scam of Centra Tech. At the same time the crypto guru influencer who initially endorsed the ICO realized that he made a mistake. He retracts the endorsement, invites Sam for an interview, which goes very bad and show how Sam and company were actually scammers.
Things start going bad for the Centra Tech. But they don't care, they have already made millions. They start receiving cease and desist letters from banks and companies. They needed a law firm. They go online and find a law firm. The funny thing is they end up hiring a law firm, I don't remember the name, which ends up being a scam as well. They never saw the lawyers in person, were sending payments, etc. But later they find out that a college student created a website of a non-existent law firm to scam others. Irony of scammers being scammed. The come to this realization when they actually hire an in-house lawyer because of more legal issues. Now SEC was coming after them, now FBI was investigating them.
Long story short, they get caught and prosecuted. Sam gets 8 years in prison. Another executive, Robert Farkas gets 1 year in prison, who came later to the project, and possibly wasn't aware of most the scam Ray and Sam came up with. I was very surprise that Ray himself got zero prison time, and was granted "time served". Wow. The main mastermind of the entire scam, the most shady character in the entire story ends up getting away with a huge scam. The crazy part is he even manages hide some of the money made in this scam and keep it. It kinda become obvious during one of the interviews.
So why Ray didn't get any prison time or didn't face any kind of legal consequences? That is because he starts cooperating with the FBI right away when the investigations start and threat of being caught emerges. He tells all the story, and throws everybody under bus. Still, I am surprised that the main criminal prosecuted properly. That is kinda crazy. Something wrong with the system. Similarly if Sam or Robert decided to cooperate they would get away and others would be punished? Anyway, that isn't even the craziest part of the story. For me the most shocking and revealing part was what the government did with the money.
At the end it is revealed that government seized 100,000 Eth from Centra Tech. But non of the victims of this scam were compensated. None of the money lost in this scam was returned to the victims of this massive scam. Where did the eth go? What is the point of seizing eth and sending guilty parties to prison, if victims can't get what is theirs? I understand if there was some delay in distributing the funds to those who lost them. But not giving any back or having a process to do so, also seems like a scam. In today's prices 100k eth would be decent amount in fiat that could pay back all the victims with bonuses. In the documentary it was said that as of August 2023, none of the victims received any funds from the seized eth. However, things may have changed since then, I thought. Ok, looks like there is some process in place to award victims some funds. But doesn't look like anything happened yet. Just like MtGox this probably will take decades. So efficient.
Let me know what you think about the documentary and the story of Centra Tech in the comments.