SEC Charges Crypto Company Dropil Founders for Conducting Fraudulent and Unregistered ICO - Cryptonic News

SEC Charges Crypto Company Dropil Founders for Conducting Fraudulent and Unregistered ICO

The Securities and Exchange Commission (SEC) has filed a lawsuit against California-based Founders for allegedly conducting a fraudulent and unregistered initial coin offering (ICO).

The founders of the crypto company Dropil, Inc., Jeremy McAlpine, Zachary Matar, and Patrick O’Hara supposedly raised more than $1.8 million from thousands of investors.

The funds raised between January and March 2018 were meant to serve as an investment in the DROP token that Dropil will manage and multiply through its algorithmic trading bot “Dex”.

The participants were promised to get profits every 15 days. The SEC claims that Dropil has diverted investor funds into personal bank accounts of the founders and other projects. And allegedly the company has created false profitable reporting documents to cover its tracks when paying Dex users with DROP tokens.

“There is no record that Dex, which Dropil promoted as a differentiating feature of DROPs, ever operated or generated any trading profits,” the SEC said in court documents.

The SEC further alleges that Dropil misrepresented the amount and volume of DROPs sold during and after the ICO. The company said it had raised $54 million from 34,000 investors in the US and across the world but actually raised only $1.8 million from 2,472 investors.

The founders violated the antifraud provisions of the Securities Act and the Exchange Act, as per the Commission. The complaint further claims that Dropil provided false evidence and testimony during the SEC investigation.

The Founders are charged with violating the registration provisions of Section 5 of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

The SEC is definitely tightening its approach on the ICO matter. Last year the Commission ordered Blockchain Company to pay a penalty of $24 million for conducting unregistered ICO. SEC also temporarily halted token sales of Telegram’s TON cryptocurrency stating that token sales are unregistered and do not comply with the regulations.

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SEC Charges Crypto Company Dropil Founders for Conducting Fraudulent and Unregistered ICO SEC Charges Crypto Company Dropil Founders for Conducting Fraudulent and Unregistered ICO Reviewed by Staff Reporter on April 26, 2020 Rating: 5

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