Bitqyck ICO Operators Fined $10 Million to Settle SEC Charges

The Securities and Exchange Commission (SEC) has settled charges against the operators of Bitqyck Inc and online deals platform for selling digital tokens in initial coin offerings (ICOs).
Bitqyck was launched in early 2017 by co-founders Bruce Bise and Samuel Mendez. However, the agency says that Bitqyck and its founder sold two digital tokens, Bitqy and BitqyM, to US investors without registering their illegal $13 million securities offering.

The SEC claims that the offering ran afoul of securities laws because the vehicle being offered could be considered securities, and thus the principles should have as broker-dealers.
The SEC further alleges the ICO operators raised the funding from over 13,000 investors, who received $4.5 million for referring new investors but ultimately lost nearly 65% of their investment in the Dallas-based company.
BitqyM claims that the funds would be used to finance its development of a smart contract-denominated ecosystem where each token provides ownership in a cryptocurrency mining facility “powered by below-market rate electricity,” the SEC described.
Over $10 million in penalties
In addition to the fact that BitqyM’s two tokens are neither registered with the SEC nor qualified for an exemption to the registration requirements, the company did not have access to cheap power and never owned any mining facility.
The SEC orders impose fiscal penalties against the company and include undertakings to compensate harmed investors who purchased tokens in . Without admitting or denying the allegations, Bitqyck, Bise and Mendez agreed to pay civil penalties of $8.3 million, $890,254 and $850,022, respectively.
“Because digital investment assets represent a 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,” said David Peavler, Director of the SEC’s Fort Worth Regional Office.
Since the crypto-boom, the SEC has periodically cracked down on a number of ICOs for fraudulent activity, while continues to warn investors of the potential perils of investing in the nascent sector. However, the regulator approved last month , which is building a platform for decentralized apps, as the first ever startup to file an application with the SEC to sell its tokens, called Stacks, under the Regulation A+ exemption.

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