Bitqyck Crypto Exchange Settles with SEC on Charges About Committing Token Sale Fraud
The U.S. Securities and Exchange Commission (SEC) has recently announced that it would settle the charges related to Bitqyck, a cryptocurrency token issuer which was accused of being a fraud. The two founders of the company, Sam Mendez and Bruce Bise, raised $13 million USD selling the tokens of their company to over 13,000 investors.
However, the sale of the tokens, which were deemed as securities by the regulators, was illegal because they were unregistered. According to the SEC, the goal of the tokens was to work like securities, as they provided a share of the company’s stocks via a smart contract.
Another accusation was that the company did not own any of the mining facilities that it affirmed to have. This company received $4.5 million USD from the investors but was not completely truthful when it disclosed its business.
According to David Peavler, a regional director of the SEC, digital assets such as this one can look appealing at first, but they might be dangerous investments.
During its investigations, the SEC was aided by the Texas State Securities Board and Hawaii’s Securities Commissioner Office.
Now, the company has decided to settle the matters and will pay around $8.5 million USD in penalties. Each of the founders will also have to pay over $850,000 USD.
This is part of a current trend that the SEC is following of prosecuting companies that offer illegal securities. Over 40 companies focused on the blockchain technology and cryptos were prosecuted so far.