The Leader of ProCurrency sued by the SEC for Running a Multimillion-Dollar Pyramid Scheme.

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Judging by a recent press release by the SEC, Daniel Pacheco, the owner of ProCurrency, has been charged as the alleged perpetrator of a multimillion-dollar pyramid scheme. He is a resident of San Clemente, California. 

Fraudulent, Unregistered Offering of Securities

The SEC complaint reads that in the period of January 2017 to March 2018, Pacheco conducted a fraudulent, unregistered offering of securities through his California based companies. IPro Solutions LLC and IPro Network LLC 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,” reads the SEC press release.

The SEC also provided the original complaint, and it alleges that Pacheco’s IPro institutional packages consisted of 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,” says the SEC. Needless to say that Pacheco didn’t have a registered exemption that would apply to his institutional packages.

Luxury Lifestyle

According to the press release, Pacheco used the investors’ funds to secure his luxury lifestyle. He purchased a house for $2.5 million in cash, a Rolls-Royce and other expensive things. Of course, this fraudulent use of investors’ funds, led the company to a indefinite collapse. IPro became unable to pay out all the commissions and bonuses that were granted to its investors.

However, the scheme went on for a while. For about a year and a half, IPro managed to reach approximately 20,000 users raising around $26,5 million. IPro sold e-commerce lessons on how to generate profits with an online store. The plan also consisted of a recruitment-based compensation plan which enabled users to exchange IPro points into their native cryptocurrency ProCurrency.

Not to mention that IPro promised their investors that they would establish an e-commerce platform where users could use the ProCurrency. Thus raising the cryptocurrency value as well over time.

Trying to Get the Money Out

Daniel Pacheco transferred $1.9 million to Accept Success Corporation, which is owned by his daughter but still managed by himself. Another $2 million were moved to E Profit Systems LLC, a limited liability company also controlled by Pacheco. From the $2 million he kept $600,000 worth of IPro funds for himself without any justified reason.

However, the compensation plan of IPro had to give out a recruitment bonus between 58 and 65 percent of all its revenue from the company’s packages. Also, according to the SEC, 30% of the recruitment bonuses were given out in Pro Currency-convertible points, leaving the company to allocate between 41.5 and 45.5 percent of all its profit for its members’ bonuses and commissions.

Moreover, IPro started paying out less than 30% between January 2017 and August 2018, which led to the inevitable collapse of the company, forcing it to close its services in March 2018.

“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,”

said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.

ProCurrency

When looking at the statistics that CoinMarketCap provides us, we can see, that ProCurrency now has a market cap of $151,102 (or 17 BTC) and it sits at $0,001479. The price has been gradually fallen since the end of January 2018. Then it was worth $0.15 and the market cap was around $15 million. However, its all-time high was in 2017, July when it reached the price of $0,36. Currently, you can trade the cryptocurrency on HitBTC and Trade Satoshi exchanges, however, only HitBTC has a daily volume of $17,389 while Trade Satoshi has $0 volume. 

Source:

https://www.sec.gov/news/press-release/2019-74
https://www.sec.gov/litigation/complaints/2019/comp-pr2019-74.pdf
https://coinmarketcap.com/currencies/procurrency/#markets

Photo by Wikimedia Commons.

The promoter of BitConnect pyramid scheme has been finally arrested!

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Divyesh Darji – the man behind the unbelievable crypto pyramid scheme scam called BitConnect (BCC), now is sitting in jail, as he was returning from Dubai. He and his team was scamming millions of dollars from naive Investors. 

Gujarat Police department comments

“Darji was living in Dubai. A look-out circular was issued against him. The Immigration Department alerted us when he was on the way from Dubai to Ahmedabad, after which he was arrested today evening. The company came into existence in 2016, and in 2017, it launched the BitConnect coin. It remained active till January this year. […] The accused held seminars, events in India and other countries promising high interest — daily interest rate of 1 percent — on investment in BitConnect coins. The cost of one BitConnect coin on January 16, 2018, when the company shut down, was $362”, said the inspector P G Narwade of Criminal Investigation Department (CID-Crime) of Gujarat police.


“When this information emerged, Kumbhani and other BitConnect promoters came under the CID’s scanner. In January this year, Kumbhani and other promoters suddenly closed the exchange and became untraceable. Investors lost money as they could no longer withdraw or trade their BCC tokens or coins”, the CID said.

These are all good news, since I believe, the former investors are actively following the court process of BitConnect. And news like these are sending a good message to other past crypto scams. They might receive their judgement as well. At least now they (investors) can sit with a hope that BitConnect will receive a punishment they deserve.

Source:

https://goo.gl/a1QWY4

https://goo.gl/62cJkf

Lawsuit against BitConnect: Youtube added as a defendant

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The lawsuit which was initiated in July 24th states that BitConnect issued crypto tokens that were unregistered securities, and obtained additional funds through a wide ranging Ponzi-scheme. The lawsuit was filed by 6 individuals who claim to have lost around $771,000. 

BitConnect and its affiliates used Youtube to spread their fraudulent investment scheme through videos. Youtube has failed to delist and demonetize the published videos. The top ten affiliates had posted more than 70,000 hours of unedited content which generated around 58 million views.

“This case is not about YouTube being the speaker or publisher of the content on its website. Instead, liability is predicated on YouTube’s failure to act after learning from content directly published on YouTube of the readily foreseeable harm posed by its advertising partners… As the old saying goes: Sometimes when you lie down with dogs, you get fleas” said David Silver of Silver Miller, the firm which represents the 6 individuals in the lawsuit.

The plaintiffs are sure that if Youtube had developed an appropriate search of its databases, it probably would have delisted the harmful activities of BitConnect videos.

The document which has been filed in court, concludes:

“YouTube failed as a gatekeeper to protect its users from, and warn its users of, the very harm YouTube set out to prevent with its advertising protocols and proprietary algorithms.”

Source:

https://goo.gl/ZY8sqm

https://goo.gl/d3aMw2 – court documents