The Securities and Exchange Commission (SEC) chalked up another win against fraudulent ICOs yesterday when it announced that it had settled with Bitqyck Inc. and its founders, who were accused of defrauding investors through the sale of two digital assets – Bitqy and BitqyM. The founders were also accused of operating an unregistered exchange while raising $13 million from a token sale , $10 million of which the SEC has taken back as part of the settlement.
Litany of Fraudulent Claims
The SEC’s complaint centered around Bitqyck and founders Bruce Bise and Sam Mendez creating and selling Bitqy and BitqyM in unregistered securities offerings to more than 13,000 investors who allegedly received $4.5 million between them for referring new investors to Bitqyck. However, collectively the investors lost much more than this as the value of the token plummeted from $0.09 shortly after launch $0.0009 just a year later.
The SEC also alleged that Bise and Mendez misrepresented QyckDeals, a daily deals platform using the Bitqy token, as a global online marketplace, falsely claiming that each Bitqy token provided proportional shares of Bitqyck stock through a smart contract. The pair also falsely claimed that BitqyM tokens provided an interest in a Bitqyck crypto mining facility powered by reduced-rate electricity. In reality, no such facility existed. Bitqyck is also alleged to have illegally operated TradeBQ, an unregistered security exchange offering trading in a single security – Bitqy.
Another One Bites the Dust
This barrage of complaints led to Bise and Mendez agreeing to pay penalties amounting to $10.11 million and the SEC to notch up another win against crypto projects that contravene the law following recent victories against Veritaseum and ICORating. The news made little difference to the value of the Bitqy token, only because it is already as low as a token value can be before it runs out of zeros after the decimal point. David Peavler, Director of the SEC’s Fort Worth Regional Office, said of the settlement:
We allege that the defendants took advantage of investors’ appetite for these investments and fraudulently raised millions of dollars by lying about their business.
This is a tale we have heard time and time again over the years, but with the ICO craze now over and regulations clamping down on such activity, we can hopefully look forward to fewer such scams in the future.
