The United States Securities and Exchange Commission (SEC) has filed charges against Dropil, a crypto company, over its 2018 ICO. The filing was made in the Central District Court of California on April 23, 2020, alleging that the defendants defrauded their investors and hosted an unregistered ICO. The defendants include the crypto company Dropil Inc., and its founders, Patrick O’Hara, Jeremy McAlpine and Zachary Matar.

The US SEC is seeking disgorgement of Dropil’s ICO funds, injunction relieve and other penalties deemed necessary. According to the filing, the US SEC alleged that Dropil sold its DROP tokens between January and March of 2018, raising over $1.8 million from investors. They also allege that, the company and its founders informed investors that their funds will be pooled together by a trading bot known as Dex. With this, their funds would be combined to trade in several cryptocurrencies using a Dropil-designed algorithm.

However, the SEC claims that none of the above promises ever happened. According to them, despite Dropil promising investors of receiving profits every 15 days, the founders rather diverted the investors’ funds to their own personal bank accounts and other projects. The SEC alleges that Dropil created false reporting statements to cover up their fraud, while paying Dex users with DROP tokens.

According the SEC, Dropil raised less than $1.9 million during its ICO phase from only 2,472 investors. Meanwhile, the company had misled its investors that it raised $54 million from more than 34,000 investors.

Over the past few months, the commission has been proactive in its approach to allegedly illegal fundraising by crypto startups. Last month, the Central District Court of California fined ICOBox $16 million through a motion submitted by the SEC for hosting unregistered securities sales. In February the SEC also charged Hollywood actor, Steven Seagal with unlawfully promoting ICO.