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SEC Files For Civil Injunction For Launching Crypto Ponzi Scheme

May 24, 2019 12:18
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The Securities and Exchange Commission (SEC) filed a civil injunctive against Daniel Pacheco, who was the perpetrator of a multi-million dollar pyramid scheme.

The complaint filed by the SEC stated that for a period of time spanning from January 2017- March 2018, Pacheco conducted an unregistered, fraudulent offering of securities through two California-based companies he controls, IPro Solutions LLC and IPro Network LLC (collectively, “IPro”). The complaint further stated that investors also received “points” that could be converted into a digital asset known as PRO Currency.

Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office, said, “We allege that Pacheco hid an old fraud under the guise of cutting-edge technology. He enticed investors by offering them the opportunity to speculate in cryptocurrency, when in fact he was simply operating a pyramid scheme.”

According to the SEC, IPro’s inevitable collapse was hastened by Pacheco’s fraudulent use of investor funds, which included, among other things, the all-cash purchase of a $2.5 million home and a Rolls Royce. Pacheco’s misappropriation accelerated the rate at which IPro became unable to pay the commissions and bonuses due its investors.

The complaint further alleged that Pacheco’s offer and sale of IPro instructional packages constituted an unregistered sale of securities because the IPro instructional packages involve (i) an investment in a pyramid scheme; and/or (ii) an investment in the PRO Currency digital assets, and therefore must be registered with the SEC unless an exemption applies. No registration exemption applies to Pacheco’s offer and sale of IPro instructional packages.

In September last year, the Securities and Exchange Commission (SEC) filed charges against an international securities dealer and its Chief Executive Officer (CEO), who is based out of Austria. The charges were filed for alleging violating the federal securities laws in regard to securities-based swaps that are funded by bitcoin.

The company, 1 Pool Ltd, also known as 1 Broker, which was registered in the Republic of Marshall Islands and the CEO, Patrick Brunner lured in investors from across the United States and other parts of the world to buy and sell security-based swaps.

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