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SEC Sues California Resident Over Crypto Ponzi Scheme


The Securities and Exchange Commission (SEC) has filed a lawsuit against a California resident on charges of selling unregistered securities and conducting a multimillion-dollar ponzi scheme, promising investors cryptocurrency profits.

The U.S. Securities watchdog stated that it filed for an injunction against Daniel Pacheco, a resident of San Clemente, California, who allegedly raised $26 million through the scheme.

SEC alleges that from January 2017 to March 2018, Pacheco conducted a fraudulent, unregistered offering of securities through two California-based companies he controls - IPro Solutions LLC and IPro Network LLC.

The two companies raised more than $26 million from investors by selling instructional packages that provided lessons on e-commerce. Investors also received "points" that could be converted into a digital asset known as PRO Currency. Investors who contributed additional funds could earn a mixture of cash commissions and additional convertible points by recruiting new investors into the IPro network.

However, the pyramid scheme collapsed by Pacheco's fraudulent use of investor funds, including his purchase of a $2.5 million home and a Rolls Royce car. Consequently, IPro became unable to pay the commissions and bonuses due to its investors.

SEC alleged that Pacheco's offer and sale of IPro instructional packages constituted an unregistered sale of securities.

Michele Wein Layne, Director of the SEC's Los Angeles Regional Office, 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," Layne added.

The SEC's complaint, filed in U.S. District Court for the Central District of California, charges Pacheco with violating sections of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934.

The complaint also names seven entities or people that allegedly possess funds belonging to IPro's investors.

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