The United States Securities and Exchange Commission (SEC) has released its settlement charges for Dallas-based crypto exchange, Bitqyck Inc., and its founders, according to a press release from the regulator today.
Bitqyck was alleged to have conducted two illegal Initial Coin Offerings (ICOs) for its tokens Bitqy and BitqyM tokens to more than 13,000 investors, raising over $13 million in the process.
Founders of the defunct crypto exchange, Bruce Bise and Sam Mendez were also charged for misleading the public with a referral scheme, which saw existing investors received $4.5 million for referring new investors to the exchange, but collectively lost more than two-thirds of their investment.
The SEC stated that both founders misled investors by branding Bitqyck as a global online marketplace that owns a cryptocurrency mining facility when, in reality, the firm does not have any mining facility.
Investors were told that buying either the Bitqy or the BitqyM token would provide “fractional shares of Bitqyck stock through a smart contract.”
Commenting on the incident, Director of the SEC’s Fort Worth Regional Office, David Peavler, said that it is clear that the exchange took advantage of investors’ appetite by lying to them.
He stated that they also used enticing antics like assuring investors of having some control over the day-to-day decision-making process while adding:
Because digital investment assets represent new and exciting technology, they can be very alluring; especially if investors believe they are getting in on the ground floor and will own part of the operations.
Per the release, the U.S. regulator has filed that Bitqyck is given civil monetary penalties of $8.376 million, permanent injunctions and that all ill-gotten profits should be returned with immediate effect to the investors.
The defendants agreed to all the injunctive relief filed by the SEC, as both Bise and Mendez were subsequently charged to pay disgorgement and prejudgment interest of $890,254 and $850,022 respectively.
