The U.S. Securities & Exchange Commission (SEC) alleges three California scammers defrauded investors of millions using a fake crypto trading bot and falsified reports. 

According to the complaint filed by the SEC on April 23, the SEC has charged Dropil, Inc. and it’s three California-based founders with defrauding investors in a “fraudulent and unregistered” initial coin offering (ICO) which raised more than $1.8 million from thousands of investors. 

Dropil, Inc. founders Jeremy McAlpine, Zachary Matar and Patrick O’Hara were accused of selling DROP tokens from January to March 2018. The complaint states investors were told their funds would be pooled and used to trade various digital assets by a “trading bot” named Dex, using a proprietary algorithm designed by Dropil. Investors were promised a distribution of the profit in DROP tokens every 15 days. 

However, the complaint alleges investor money was diverted to other projects, as well as the founders’ “personal digital asset” and bank accounts. Dropil also allegedly created false profitability reports, giving the appearance that the program was profitable. 

The founders were accused of misrepresenting the volume and value of DROP sold during and after the ICO, claiming they had raised $54 million from 34,000 investors despite only receiving $1.9 million from less than 2,500 participants. 

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