2 California Men Receive Prison Terms for $1.9 Million Crypto Swindle
According to the Department of Justice, two individuals from Orange County, California, were given prison terms on Monday for running a cryptocurrency scam that defrauded over 2,000 investors out of a total of $1.9 million.
Dropil Inc. was formed in 2017 by Jeremy McAlpine, 26, and Zachary Matar, 29, who controlled the business until March 2020. Dropil advertised itself as a trading platform and investment management solution.
DROP, Dropil's native token, was promoted as an investment opportunity during the company's 2018 ICO. Investors were given access to "Dex," an automated trading bot, through the purchase of DROP, which would produce annual returns of up to 63 percent in DROP and distribute them every 15 days.
But according to the authorities, Dex never ran a business or made any money. McAlpine and Matar provided false sworn testimony about the number of investors in the project and the amount of money raised during the ICO, lying to both investors and the U.S. Securities and Exchange Commission about Dex's functionality and fabricating false profitability reports in response to subpoenas.
In August 2021, McAlpine and Matar each entered a guilty plea to one count of securities fraud. They received their sentences to federal prison on Monday. Matar is facing a two-and-a-half-year term, while McAlpine is facing a three-year sentence.
McAlpine and Matar admitted to civil securities offenses when the SEC filed a complaint in July 2021, along with another defendant named Patrick O'Hara.
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