The Securities and Exchange Commission (SEC) filed a lawsuit against Dropil Inc., a California-based company operating a cryptocurrency platform, for allegedly conducting a fraudulent and unregistered initial coin offering (ICO).
The SEC also sued Dropil’s founders Jeremy McAlpine, Zachary Matar, and Patrick O’Hara.
In the complaint, the Commission alleged that Dropil and its founders defrauded investors who participated in their unregistered DROP tokens ICO.
The defendants allegedly lied to investors by misrepresenting Dropil’s financial status and overstating the success of their ICO. They claimed that they raised $54 million from 34,000 investors in the United States and overseas. In reality, Dropil only raised $1.8 million from 2,472 investors.
Additionally, Dropil and its founders allegedly lied about their use of investor funds. They told investors that they would pool their funds to trade different cryptocurrencies through Dropil’s “trading bot” called Dex to generate profits. The defendants claimed that they will distribute the profits as additional DROP tokens every 15 days.
