Dropil co-founders sentenced to prison for securities fraud and a $1.9 million crypto scam

On Monday, Dropil co-founders were sentenced to federal prison for scamming investors to steal around 41.9 million
On Monday, Dropil co-founders were sentenced to federal prison for scamming investors to steal around 41.9 million

On Monday, the United States Attorney’s Office in California revealed in a press release that Dropil co-founders were sentenced to federal prison for scamming investors to steal around $1.9 million.

During 2017’s crypto ICO craze, Jeremy McAlpine and Zachary Matar founded a crypto company established in Belize and operating in California, dubbed Dropil. The company developed a crypto trading program, an automated trading bot Dex, and an altcoin called DROP.

The press release revealed that McAlpine, Matar, and their company Dropil did not register DROP with the United States Securities and Exchange Commission (SEC) and “made a series of false statements to investors,” promising them an annual return of 24-63% on their Dex.

Dropil co-founders produced fake documents and reports

After receiving subpoenas, McAlpine and Matar produced fake Dex profitability reports, giving the misleading picture that Dex was functional and profitable, and produced additional fake documents stating that Dropil had raised $54 million from 34,000 investors when it had actually raised less than $2 million from fewer than 2,500 investors.

On Monday, McAlpine and Matar have finally been convicted of securities fraud and scams and sentenced to 3 years and 2.5 years in prison, respectively.

The two were sentenced on Monday, more than two years after the SEC first accused them of scamming investors and a year after Dropil co-founders pleaded guilty to one count of securities fraud each.

This summer, the SEC has been very active with crypto-related investigations. According to the latest news from TheCoinRise, the Commission charged 11 people on Monday for allegedly taking part in the $300 million Forsage global cryptocurrency scam. The Forsage platform was a Ponzi scheme during its two years of operation since it paid its old investors with money from new investors.

Additionally, the regulator has opened an investigation into Coinbase to investigate if the crypto exchange is listing unregistered securities.