The US’ top financial watchdog has settled with Dallas-based blockchain startup Bitqyck Inc. over allegations it fraudulently sold shares of company stock to more than 13,000 buyers of its Bitqy cryptographic token.
In a statement released yesterday, the US Securities Exchange Commission (SEC) also alleged the firm and its founders Bruce Bise and Sam Mendez fraudulently promised investors interest in a cryptocurrency mining facility through sales of a secondary token, BitqyM, and its related blockchain-powered smart contract.
That facility was supposed to be powered by below-market rate electricity. As it turns out, there was no such deal, and no such facility – the entire mining operation was a fake.
“Bitqyck, aided and abetted by its founders, also is alleged to have illegally operated TradeBQ, an unregistered national security exchange offering trading in a single security, Bitqy,” said the SEC.
Although Bitqyck’s founders did not confirm or deny the allegations, the pair agreed to return all money raised (more than $13 million) with interest.
Bise and Mendez will also need to pay a civil penalty of $8,375,617, as well as $890,254 and $850,022 respectively.
This continues a veritable trend of judgements against (allegedly) fraudulent cryptocurrency startups across the US and beyond.
Earlier this month, the SEC moved against a “self-described financial guru” that raised $14.8 million with an allegedly fraudulent ICO, while last week saw the SEC reach a settlement with a Russian firm that advertised initial coin offerings without disclosing that it had been paid to shill the coins.