US SEC Reaches $10 Million Settlement With Digital Assets Issuers

The United States Securities and Exchange Commission (SEC), a primary governmental regulator, has settled charges with digital assets company Bitqyck Inc. and its founders.

The SEC announced the development in a press release on Aug. 29. According to the announcement, Bruce Bise and Sam Mendez­ are the founders of Bitqyck — a company that provided security offerings for digital assets Bitqy and BitqyM in Dallas, Texas. The company claimed that Bitqy tokens gave investors fractional shares of company stock via a smart contract. Additionally, Bitqyck said that BitqyM tokens would give holders interest in a cryptocurrency mining facility running on sub-market-rate electricity, per the press release.

The SEC alleged in its complaint that both of these claims were false. The SEC alleged that the founders fraudulently misrepresented a platform called QyckDeals, which was a deals platform for Bitqy tokens. Lastly, the SEC charged the company with illegally operating an unregistered, national security exchange for Bitqy entitled TradeBQ.

The SEC reports that Bitqyck raised over $13 million in fundraisers for its unregistered securities. Further, the release reads that investors received $4.5 million via referrals, but still lost over two-thirds of their investments as a whole.

According to the announcement, Bitqyck and its founders have settled with the regulator. As per the settlement agreement, Bitqyck will pay $8,375,617, and Bise and Mendez will pay respective fines of $890,254 and $850,022.

SEC chairman Jay Clayton recently told Bloomberg that he doesn’t plan to change securities laws to accommodate digital assets. He stated:

“I think a lot of people got excited that somehow we would change the rules to accommodate the technology and they invested their time and effort thinking that would happen […] I have been pretty clear from the start, that ain’t happening.’’

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