The owners of a cryptocurrency firm that raised approximately $24 million from more than 13,000 investors have pleaded guilty to tax evasion. “These crypto-savvy defendants exploited an emerging technology, lying to their investors, pocketing the proceeds, and concealing the income from the IRS,” said acting U.S. Attorney Chad Meacham.
Crypto Firm’s Founders Face up to 5 Years in Jail
The U.S. Department of Justice (DOJ) announced Tuesday that the owners of a cryptocurrency company have pleaded guilty to tax evasion.
Bitqyck founders Bruce Bise and Samuel Mendez were charged with tax evasion in August. Bise pleaded guilty on Sept. 9 and Mendez pleaded guilty Tuesday morning. Citing plea papers, the DOJ detailed:
Mr. Bise and Mr. Mendez admitted that Bitqyck raised approximately $24 million from more than 13,000 investors. Instead of fulfilling their promises to these investors, the defendants used Bitqyck funds on personal expenses, including casino trips, cars, luxury home furnishings, art, and rent.
“These crypto-savvy defendants exploited an emerging technology, lying to their investors, pocketing the proceeds, and concealing the income from the IRS,” acting U.S. Attorney Chad Meacham described.
The pair promoted the company’s cryptocurrency, Bitqy, “as a way for those individuals who missed out on bitcoin to get rich,” the DOJ noted, adding that they held their initial coin offering (ICO) in 2016.
A white paper posted on the Bitqyck website promised investors that each Bitqy token came with 1/10th of a share of Bitqyck common stock. However, Bise and Mendez admitted that they never actually distributed shares to token holders nor embedded the shares within the Ethereum Smart Contract.
About nine months after launching Bitqy, Bise and Mendez began marketing another token, Bitqym. They claimed that buying the token allowed investors to join “Bitcoin mining operations.” However, in reality, the pair admitted that no such mining facility ever existed.