US SEC charges Bitqyck for unregistered token sale

The US Securities and Exchange Commission (SEC) has settled with the cryptocurrency exchange Bitqyck and its founders the case of two unregistered token sales.

August 30, 2019 | AtoZ Markets – The United States Securities and Exchange Commission (SEC) on 29th August 2019 has announced settled charges with Bitqyck Inc (a company which deals with digital assets.) The US SEC charged its founders who have apparently cheated investors in securities offerings of two digital assets which are Bitqy and BitqyM. Bitqy is a digital token which has been operated on unregistered exchange to permit trading.

US SEC charged Bitqyck founders for illegal digital assets operations

According to the US SEC, Bitqyck and founders named Bruce Bise and Sam Mendez has created and sold Bitqy and BitqyM in unregistered securities offerings to 13k plus investors and raised more than $13 mln in total. The investors received 4.5 USD mln just for referring new clients but in total lost more than two-thirds of their investment in the Dallas based firm.

The US SEC’s complaint also shows that Bise and Mendez misrepresented QyckDeals which is a daily deals platform using Bitqy as a global online marketplace. They falsely claimed that each Bitqy token provided some shares of Bitqyck via smart contracts.

The complaint also mentioned that the Dallas based firm falsely told investors that BitqyM tokens provided an interest in a Bitqyck cryptocurrency mining facility which is powered by lower electricity rate from the market price.

Read more: SEC fines ICORating for misleading ICO reviews

However, the reality is that Bitqyck did not have any access to discounted electricity and even don’t have mining facilities.

Moreover, Bitqyck founders are also alleged to have illegally operated TradeBQ which is an unregistered national security exchange offering to trade in a single security.   

SEC’s Directors’s comment regarding the case

David Peavler, Director of the SEC’s Fort Worth Regional Office quoted that: “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. We allege that the defendants took advantage of investors’ appetite for these investments and fraudulently raised millions of dollars by lying about their business.” 

The US SEC’s complaint which has been filed in U.S. District Court for the Northern District of Texas, Dallas seeks permanent sanctions and gained immense capital with interest and civil money penalties. In addition to this, without admitting or denying the fact that Bitqyck, Bise and Mendez agreed to the final judgments from the court agreeing to all injunctive release. The company also agreed to an order requiring that it pay disgorgement, prejudgment interest and a civil penalty of 8,375,617 USD. 

On the other hand, Bise and Mendez consented to the entry of an order that they each pay prejudgment interest and a civil penalty of $890,254 and $850,022 respectively.  

According to the SEC, the Commission has settled business with nearly 40 cryptocurrency startups that have been selling tokens over the past few years. Just this month, the healthcare blockchain company SimplyVital Health settled the issue with the Commission regarding its $ 6.3 million ICO held in 2017.

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