SEC goes after Bitqyck founders in digital asset fraud case
According to the SEC’s complaint, Bitqyck and its founders Bruce Bise and Sam Mendez sold Bitqy and BitqyM in unregistered securities offerings, raising more than $13 million.
The United States Securities and Exchange Commission (SEC) has earlier today announced settled charges with Bitqyck Inc. and its founders – Bruce Bise and Sam Mendez, who allegedly defrauded investors in securities offerings of two digital assets, Bitqy and BitqyM, and operated an unregistered exchange to permit trading in one of them, a digital token called Bitqy.
According to the SEC’s complaint, Bitqyck and its founders created and sold Bitqy and BitqyM in unregistered securities offerings to more than 13,000 investors, raising more than $13 million. Investors allegedly received $4.5 million for referring new investors to Bitqyck but collectively lost more than two-thirds of their investment in the company.
The SEC’s complaint alleges that Bise and Mendez misrepresented QyckDeals, a daily deals platform using Bitqy, as a global online marketplace, and falsely claimed that each Bitqy token provided fractional shares of Bitqyck stock through a “smart contract.” Bitqyck, aided and abetted by its founders, is alleged to have illegally operated TradeBQ, an unregistered national security exchange offering trading in a single security, Bitqy.
The SEC’s complaint, filed in U.S. District Court for the Northern District of Texas, seeks permanent injunctions, return of allegedly ill-gotten gains with interest, and civil money penalties.
Without admitting or denying the allegations, Bitqyck, Bise and Mendez consented to final judgments agreeing to all the injunctive relief. Bitqyck consented to an order requiring that it pay disgorgement, prejudgment interest and a civil penalty of $8,375,617. Bise and Mendez consented to the entry of an order that they each pay disgorgement, prejudgment interest and a civil penalty of $890,254 and $850,022, respectively.
This marks yet another action by the regulator against cryptocurrency scams. Earlier this month, the SEC filed a complaint against Veritaseum, LLC and Veritaseum, Inc. and Reginald Middleton with the New York Eastern District Court. The emergency action aims to stop the defendants’ dissipation of the approximately $8 million of investor proceeds that remain from the approximately $14.8 million they fraudulently raised in 2017 and early 2018 in an offering of digital securities.