Two crypto fraudsters have been jailed for masterminding a digital asset investment scam that saw more than 2,000 investors lose $1.9 million.
Jeremy David McAlpine and Zachary Michael Matar, of Orange County in California, were sentenced for their role in the Dropil investment scam. A DoJ statement said that McAlpine got 36 months, while Matar received a 30-month sentence after they both pleaded guilty.
In 2017, the duo created a Belize-based company under the guise of managing investments in digital assets and created DROPs, a cryptocurrency for the project.
A trading bot called “DEX” was also launched as part of Dropil’s virtual assets trading program and marketed as an algorithm that “expertly manages risks.”
Crypto trading bot promised high returns
The duo falsely claimed that DEX would bring high-yielding returns of up to 63% for investors, while DROPs would see a spike in values, according to the white paper.
Selling the securities without being registered with the Securities and Exchange Commission (SEC) was only the start of their crimes, as the duo went on to commit more infractions.
By 2019, the SEC was hot on the trail of McAlpine and Matar. Several investigative subpoenas were sent by the Commission to the team, however, both defendants misrepresented the figures to give the impression that they were operational.
An investor spreadsheet submitted to the SEC claimed that Dropsil raised $54 million from 34,000 investors within and outside the U.S.
But further investigation showed the team realized barely $2 million from less than 3,000. The funds were used to “fund disbursements to themselves and their associates,” with the DOJ describing their actions as causing “financial harm to an extremely large number of victims.”
Law enforcement agencies on a roll
Law enforcement agencies are on a winning streak in closing down on digital asset fraudsters. The SEC busted the operations of Forsage, charging 11 persons to court for the offense of running a Ponzi scheme.
And in Europe, a massive manhunt has been organized by a combination of local and international security agencies in search of Ruja Ignatova, founder of the OneCoin scam that defrauded investors of billions of dollars.
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