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Two Orange County residents have just been jailed following the unravelling of the DROP crypto scam.

The Charges

Scams, rug pulls, and deceptive sales techniques are unfortunately all too common within the crypto industry. Take the Teddy Doge Rug Pull as an example. As the crypto market grew over the past couple of years, an increasing number of scams have arisen. Sadly, due to the privacy and anonymity centric nature of cryptocurrency, the perpetrators of many of these schemes seem to get away scot-free. However, the team behind the DROP crypto scam weren’t so lucky.

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The U.S. Department of Justice has reported that the individuals behind the scam, Jeremy David McAlpine and Zachary Michael Matar, have been sentenced to 36 and 30 months respectively in federal prison. Both parties had previously pled guilty to a charge of securities fraud in August 2021.

How Did the Scam Work?

In one of the more complex crypto scams, the pair founded a company called Dropil Inc. The company was created to manage investments and provide digital asset investments, including McAlpine and Matar’s own cryptocurrency called DROPs. The duo also developed an automated trading bot titled ‘Dex’. The bot was specifically designed to trade DROPs with McAlpine and Matar claiming the bot could offer annualized returns of between 24% and 63% based on which ‘risk profile’ the investor selected.

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The pair then went on to heavily promote both DROPs and Dex by making false claims regarding the amount of investment attracted by the DROP crypto scam, as well as, the profitability of the Dex bot. McAlpine and Matar then went on to launch an initial coin offering (ICO) without registering with the securities and exchange commission (SEC), again using false claims in the project’s whitepaper and Twitter account to promote both projects. In total the two made out with $1.9 million, while 2,472 investors suffered heavy losses.

Before charges were levied against McAlpine and Matar, the SEC had issued a subpoena to the project. In response, the pair created fake spreadsheets which stated $54 million had been raised during the ICO. Furthermore, fake profitability reports were created, meant to give the illusion that Dex was indeed profitable. Later, McAlpine also worsened his situation by providing the SEC a false sworn testimony.

While the amount of scams within the crypto space can be unnerving, good projects are out there too. For example, Battle Infinity is a new project currently in presale. To ensure transparency with investors, it has already been audited by Solid Proof and KYC-verified by CoinSniper.  The Project centers around a P2E gaming ecosystem and managed to raise over $2.5 million within the first four weeks since its release.


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