However, the defendants misappropriated investor funds by paying themselves undisclosed compensation. They transferred approximately $1.4 million to the personal digital asset accounts of Dropil’s founders.
Defendants attempted to cover-up their unlawful activities
Furthermore, the SEC alleged that the defendants submitted falsified documents to cover-up their misconduct.
“Finally, McAlpine, Matar, and O’Hara attempted to cover up their fraud by producing falsified documents to the SEC staff, which were intended to give the appearance that (i) Dex had a record of trading activity which matched Dropil’s claims (it did not) and (ii) the number of investors in DROPs matched Dropil’s claims (it did not),” according to the Commission in the complaint.
According to the Commission, Dropil and its founders violated the antifraud provisions of the Securities Act and the Exchange Act. They also violated the securities offering registration provisions of the Securities Act.
The SEC is seeking a court order requiring the defendants to disgorge ill-gotten gains, pay prejudgment interest and penalties. It is also seeking permanent injunctions prohibiting them from future violations of federal securities laws.
