SEC files complaint against digital currency business co-founders, alleging they lied during investigation, provided fake business records and launched illegal ICO

By Christine Duhaime | April 27th, 2020

The Securities and Exchange Commission (“SEC“) has filed a complaint against an initial coin offering (“ICO“) and digital currency exchange platform called Dropil Inc. and three of its co-founders, Jeremy McAlpine, Zachary Matar and Patrick O’Hara, alleging that they took funds from the public on the basis of numerous untrue statements made on social media and on YouTube, and used the funds to operate an unviable business and pay their own salaries and expenses.

Moreover, the SEC alleges that when it commenced an investigation into Dropil, they gave staff at the securities commission fabricated documents about the business activities and made material untrue statements to them.

Dropil is based in Belize but its principals are in the US. In addition to launching and selling coins pursuant to its ICO to the public, according to its website, it operated an exchange, a smart wallet service and an arbitrage service for digital currencies. The ICO was not registered with the SEC.

Among the untrue statements the SEC alleges were made to the public to entice them to send the exchange money, were statements on the number of users registered at the exchange, amount of funds raised and numerous statements that the digital currency exchange was profitable, when the SEC says it was not. Its website is still active and it says that Dropil has 75,000 registered users.

The SEC alleges that the co-founders produced business documents and records for them that included thousands of pages of fake trading activity in order to give the illusion that the business had more trading activity than it did. The SEC believes that the co-founders went down the path of producing false information in an attempt to conceal fraudulent activities.

The SEC alleges that funds solicited from the public were sold though the exchange’s website and some of it was held at a Vancouver digital currency exchange called CoinPayments.

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