SEC Charges Crypto Developer For Running Unregistered ICOAuthor: Jimmy AkiLast Updated: 25 April 2020 The U.S Securities and Exchange Commission (SEC) has charged the founders of crypto automation developer Dropil for raising funds illegally. According to reports, the SEC is seeking this disgorgement because the investors allegedly had an unregistered $1.8 million in their initial coin offering (ICO) of the DROP token.Raising Funds from Unregistered SecuritiesThe SEC published its charges alongside its findings in a document. According to this release, the founders of Dropil, McAlpine, Matar, and O’Hara, from January 2018 through March 2020, raised over $2.5 million from investors selling DROP tokens.Furthermore, the founders purported to raise $54 million from 34,000 investors during their Initial Coin Offering (ICO). According to the SEC’S findings, these numbers published by the founders of Dropil were misleading. In reality, their DROP sales made less than $1.9 million, not the $54 million claimed. The SEC also claims the founders had only 2,472 investors, not the 34,000 they claimed.With gatherings from the SEC report, Dropil has drastically misled her investors and the general public by exaggerating the success of their Initial Coin Offering (ICO). It doesn’t stop here, though. The monies raised from January to March 2018, they claimed, would be investments in their DROP token. According to the information they released to the public, Dropil would administer and multiply the investments through an algorithmic investment trading robot Dex. After these, the profits would then be distributed in 15-day intervals.However, the SEC has alleged that the described trading bot, Dex plan, never existed, or the said bot never got the said investments. The SEC claims that these monies accrued, all amounting to about 1.4 million dollars, were channeled to the personal accounts of the founders. Still, these fraudulent activities by Dropil did not stop there.They kept up an act by creating fake profitability lists and reports. The SEC maintains that Dropil used the DROP payments to enhance its credibility to the public and especially to its investors.“There is no record that Dex, which Dropil promoted as a differentiating feature of DROPs, ever operated or generated any trading profits,” SEC noted in the report. The SEC has further established that the DROP distributions were only old tokens from Dropil’s reserves and trades after ICO. SEC Clamps Down On FraudRecall that in February, the SEC filed a suit against Enigma. Enigma is a project that provides privacy under decentralized applications (DApps). The SEC claimed that Enigma misinformed investors during their Initial Coin Offering in 2017. According to the charges, Enigma misled its investors and the general public that it made 45 million dollars from its 2017 ICO. Recall that Enigma agreed to pay back all funds to the investors who traded under this misinformation. Enigma also paid up to 500,000 dollars as fine.Similarly, in December 2019, the SEC uncovered a similar fraud case with Shopin CEO. Shpoin CEO, in its own ICO in 2017, gained 42 million dollars from this misinformation. The SEC will continue to seek and clamp down against investment companies engaging in similar frauds related to Initial Coin Offerings.