The U.S. Securities and Exchange Commission (SEC) is suing a California resident on charges of selling unregistered securities and conducting a Ponzi scheme disguised as a cryptocurrency.
The SEC announced Thursday that it had filed for an injunction against Daniel Pacheco, claiming that he sold unregistered securities through IPro Solutions LLC and IPro Network LLC, giving investors “points” which they could theoretically convert to PRO Currency, a digital asset affiliated with the companies.
Pacheco allegedly raised $26 million through the scheme.
Moreover, investors in the project could earn extra points or cash commissions by recruiting new members to the network, a common facet of Ponzi schemes.
In a statement, Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said that the respondent “hid an old fraud under the guise of cutting-edge technology,” adding:
“He enticed investors by offering them the opportunity to speculate in cryptocurrency, when in fact he was simply operating a pyramid scheme.”
Pacheco allegedly used the funds he raised to purchase a $2.5 million home and a Rolls Royce, resulting in him being unable to pay his investors’ cash commissions or other bonuses.
In its release, the SEC said 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.”
In its actual complaint, the SEC also lists seven entities or people that allegedly possess funds belonging to IPro’s investors, though they are not accused of any wrongdoing.
Data site CoinMarketCap lists a ProCurrency, trading around 0.196 cents as of press time. However, it is unclear whether this is the same cryptocurrency involved in the scheme.