The Securities and Exchange Commission (SEC) has settled with the founders of Bitqyck Inc. after it accused them of issuing two fraudulent token sales. According to a release issued by the federal agency, the founders allegedly defrauded over 13,000 investors of $13 million through two tokens, BitqyM and Bitqy. They were also accused of operating an unlicensed exchange to issue the Bitqy token. Bitqyck agreed to pay an $8.3 million in civil penalty while its founders, Sam Mendez and Bruce Bise, agreed to pay $850,022 and $890,254 respectively.

An Unregistered Exchange And Crypto-Mining Farms

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

Mendez and Bise created and sold the BitqyM and Bitqy tokens, mopping up $4.5 million from new investors in the company. But investors ended up losing over two-thirds of their investments in the Dallas-based company.

According to the SEC, Mendez and Bise misrepresented the QyckDeals daily deal platform as an online marketplace with a global reach. They told investors that putting their money into the Bitqy token would make them eligible to receive fractional shares in Bitqyck stock through smart contracts. Besides this, the agency charged Mendez and Bise with lying to investors about the Bitqyck crpyto mining farm, a mining at which they claimed to mine crypto below-market rates. In reality, Bitqyck did not own any crypto mining equipment. The SEC also stated that Bitqyck illegally operated TradeBQ, an unregistered national security exchange, that offered trading in only a single security – Bitqy.