Dropil founders agree to plead guilty to $1.9 million ICO fraud

The United States Department of Justice (DOJ) said that the founders of the cryptocurrency project Dropil (DROP), Jeremy Makalpin and Zachary Matar, agreed to plead guilty to securities fraud in connection with an ICO worth nearly $1.9 million.

According to the indictment, they sold DROP tokens to thousands of investors, with funds allegedly intended to finance the Dex trading bot’s operations.

According to the DOJ, neither Makalpin nor Matar are registered with the U.S. Securities and Exchange Commission (SEC). Prosecutors added that the defendants made ‘a series of false statements to investors in the white paper’ on the Dropil website and in its Twitter profile to ‘promote the success of the cryptocurrency’.

‘The defendants fabricated profitability reports for Dex and transferred DROP to Dex users, creating a false impression of its functionality and profitability,’ according to the department’s statement.

According to the DOJ, Makalpin and Matar also made false statements about the amount raised, claiming $54 million from 34,000 investors.

‘Actually, the defendants received about $1,896,657 from 2,472 investors through the sale of 629 million DROP. But Makalpin and Matar did not spend at least $1.6 million of the raised funds, using them to pay themselves and their partners,’ the department added.

Earlier they agreed with the SEC to settle the civil action filed in 2020.

Back in March 2021, Sohrab Sharma, co-founder of the Centra Tech ICO project promoted by professional boxer Floyd Mayweather, received eight years in prison.

In February the SEC accused three partners of the cryptocurrency startup Bitcoiin2Gen of fraud totaling $11.4 million in an ICO in which Hollywood actor Steven Seagal participated.

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