Dropil Founder Sentenced to Jail for $1.9M Crypto SchemeNews WAALI

Two Orange County men were sentenced Monday to more than two years in federal prison for their roles in a cryptocurrency scheme that fraudulently grossed $1.9 million, prosecutors said.

Jeremy David McAlpine, 26, of Fountain Valley, and Zachary Michael Matar, 29, of Huntington Beach, pleaded guilty to securities fraud related to the system in August 2021, the U.S. Attorney for the Central District of California said.

McAlpine was sentenced to three years in prison and Matar to two and a half years.

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They tricked more than 2,000 investors into buying Drops, a cryptocurrency that could be used with an automated trading bot called Dex from their company Dropil Inc., prosecutors said.

McAlpine and Matar made false claims about the cryptocurrency and trading bot’s profitability, as well as the number of investors and the volume of investments.

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In a white paper published by Dropil, the company claimed that Dex would yield an average annual return of 24% to 63%.

The company launched an initial coin offering, though neither was registered as a broker or dealer with the Securities and Exchange Commission.

“In response to subpoenas from the SEC, the defendants fabricated fake profitability reports of Dex that gave the false appearance that Dex was operational and profitable,” prosecutors said.

A fake investor chart showed that the company had raised $54 million from 34,000 investors, but the company raised just under $2 million from around 2,500 investors.

McAlpine has also made false statements to the SEC about the company’s profitability.

“McAlpine and Matar have used the money invested to fund payouts to themselves and their employees, as promised,” officials said.

In sentencing documents, prosecutors wrote that the actions “inflicted significant financial damage on an extremely large number of victims.”

McAlpine and Matar were also barred from offering, buying and selling digital securities in a settlement last year in a lawsuit filed by the SEC.

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