Two Orange County Men Sentenced To Federal Prison For $1.9 Million Crypto Plan

Two Orange County men were sentenced Monday to more than two years in prison for their roles in a cryptocurrency scheme that fraudulently raised $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 in connection with the settlement in August 2021, the US law firm for the Central District of California said.

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

They have persuaded more than 2,000 investors to buy Drops, a cryptocurrency that can 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 the profitability of the trading bot, as well as the number of investors and the volume of investments.

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

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

“In response to SEC investigative orders, the defendants made false reports about Dex’s profitability, creating the false appearance that Dex was operational and profitable,” prosecutors said.

A fabricated investor spreadsheet revealed that the company had raised $54 million from 34,000 investors, but had raised just under $2 million from approximately 2,500 investors.

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

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

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

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

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