Numerous ICO projects have been flagged as illegal securities. A lot of those companies are now under investigation by the SEC. The company behind BitQyck, which allegedly defrauded investors, had its founders agree to pay $8.4m in damages. This is a key development for current and future investigations.
The BitQyck Scheme
While many people assumed the BitQyck token was perfectly legitimate, it did not take long to notice something was amiss. Bruce Bise and Sam Mendez are the individuals founding this project and associated company. As part of their token sale, they sold two different assets to thousands of investors. Both BitqyM and Bitqy combined for $13m in funding.
Of that money. $4,5m was paid to users who referred others to this token sale. It was a Ponzi Scheme waiting to collapse, however. The company claimed the Bitqy token was equal to a fractional share stock in the trading platform. The BitqyM tokens were issued to fund a cryptocurrency mining setup. Most of these claims were nothing but blatant lies.
The SEC Investigates
Once the SEC got wind of the BitQyck ploy, they tried to shut it down immediately. Additionally, they charged both founders with defrauding investors and running an unlicensed trading platform. The mining operation associated with BitqyM was never created, which is where the fraud claims originate from.
The Bitqy token itself was only available for trading on TradeBQ, which was also operated by the same two individuals. While Bitqy had a use case in the form of an “online daily deals platform”, that platform served an entirely different purpose. It is evident that both individuals had major plans to deceive investors from day one, and will now pay the price for doing so.
The Final Verdict
Despite overwhelming evidence collected by the SEC, neither Bise nor Mendez pleaded guilty to any of the charges they faced. Instead, they agreed to the final judgments without further complaints. Both men will pay disgorgement, civil penalty, and prejudgment interest.
BitQyck, as a company, will pay a penalty of just under $8.4m. This is the money owed to investors, for the most part. It is a good thing to see the SEC crack down aggressively on ICO projects which fraudulently offered securities to investors. Especially those companies which claim to provide a business model which doesn’t exist in the real world.
Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.