You’ve probably heard the adage that if something seems too good to be true, it probably is. The rise of crypto over the last few years has been no exception. Some have made millions, while others have lost everything on the back of scams.
Ray Trapani was the perpetrator of one such con, luring investors to back his Centra Tech crypto card that was built on the back of dubious claims before he and his business partners got caught.
Trapani, who was profiled in the hit Netflix documentary Bitconned and chronicled the scheme in his own Creating a Con podcast, got his punishment and is now telling his story. On Wednesday’s ‘Fraud Week’ episode, Trapani and his co-host, Jonny B Good, joined Megyn to discuss why the crypto universe is ripe with fraud.
The Backstory
Trapani was a career criminal by the time he got caught up in his crypto scandal. He started dealing drugs as a teenager, became an addict, and had a gambling problem that bankrupted his luxury rental car business in Miami before turning his attention to crypto.
He became aware of the buzzy currency through his business partner Sam ‘Sorbee’ Sharma, who pitched it as a way for the pair to pivot and get rich again. Together they co-founded Centra Tech and started pitching the idea of a crypto debit card that would allow people to more easily spend the currency.
To lure investors, the duo greatly embellished their résumés, made up a CEO out of whole cloth, fabricated business partnerships and licenses, and lied about their technology’s capabilities.
Ultimately, investors lost over $25 million while the men got off relatively easily. Sharma is serving an eight-year prison sentence, the company’s chief financial officer got one year, and Trapani avoided jail all together due to what the judge called “extraordinary” cooperation.
The Irony
Part of what makes the con so unique is the fact that the concept of the debit card was legit and exists in the market today. “What people don’t realize is that we ended up actually developing it by the time we got arrested,” Trapani told Megyn. “We had the cards working with the wallet.”
Their competitors, he said, now own the market. “There are other companies that were our competitors that made the same lies… they said they had Visa and MasterCard [as partners]… that now own Staples Center because they just settled,” he said. “So, it works. The concept works.”
Even so, Trapani admitted they got caught red-handed. “We completely lied in the very beginning. That is 100 percent true, and that is what we were arrested for,” he noted. “But once we raised a few million dollars, we actually hired 40-plus developers in-house to develop this product, we built towards what we were trying to develop, and we got there by the time we got arrested.”
Who Is ‘Complicit’?
While Trapani and co. were the ones lying to investors, he believes the entire industry was “complicit” in the con. “As much as we’re the co-founders and were the reason for this fraud, if you are going to know something is a fraud and then you’re going to promote it… or invest in it and take a lot of the percentage, they’re all complicit in a way,” he said.
On one hand, there were some of the investors themselves. Towards the end of the company’s run, a group in South Korea gave the guys some $15 million despite the fact that a failed demo showed the product wasn’t working the way they claimed. “The only take that I could get from that is that that money was also criminal proceeds,” Trapani speculated. “And that is like a lot of cryptocurrency. They joined in on the fraud.”
And then there was the media. Whenever Centra Tech would get negative press, Trapani and his team would try to pay the detractors off. Most of the time, it worked. “[It happened] maybe 50 times, like it was not even just like a couple people,” he explained. “Every single one of the people that are promoting crypto, they all are just in it for greed essentially. It was the easiest thing I’ve ever seen.”
Why Crypto Is ‘95% Fraud’
Given what he knows about the industry, Megyn asked Trapani if he was surprised about the fall of FTX and Sam Bankman-Fried. “I wasn’t shocked,” he said. “I think in cryptocurrency pretty much like 95 percent of it is fraud. If it’s not considered fraud, it’s insiders…[a.k.a.] the ones always getting rich.”
He said new loopholes are being found and exploited every day. “All these projects are making crazy money now and their new loophole is just don’t offer any product [and] tell everybody they’re gonna get rich off a picture of a dog,” he noted.
Still, Jonny B Good was slightly more optimistic – if you do the proper vetting. “People hate nuance nowadays,” he lamented. “Do you do your research. Some of them are legitimate, some of them are not legitimate. Just because one of them is a scam or, in crypto’s case, a few 100 of them are a scam, doesn’t mean they all are a scam.”
The takeaway: “I would just say stick to the basics,” he concluded. “And if there is a coin named after, like, an animal, probably don’t buy that one.”
You can check out Megyn’s full interview with Trapani and Jonny B Good by tuning in to episode 816 on YouTube, Apple Podcasts, or wherever you like to listen. And don’t forget that you can catch The Megyn Kelly Show live on SiriusXM’s Triumph (channel 111) weekdays from 12pm to 2pm ET.