Crypto Firm Owners Plead Guilty to Tax Evasion, Face up to 5 Years in Prison

Bitcoin News

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.

Furthermore, Bise and Mendez underreported their income to the IRS in 2016 and 2017. In 2018, Bitqyck failed to file any corporate tax returns at all despite netting more than $3.5 million from investors. “The total tax loss joint and severally to the United States government between Mr. Bise and Mr. Mendez is more than $1.6 million dollars,” the Department of Justice revealed.

The DOJ stated:

Both men now face up to five years in federal prison.

Bitqyck has also settled with the U.S. Securities and Exchange Commission (SEC). The company “agreed to pay an $8.3 million penalty to resolve claims that it defrauded investors and operated an unregistered digital asset exchange.” The DOJ added that as part of that settlement, Bise and Mendez “agreed to pay disgorgement and penalties of $890,254 and $850,022, respectively.”

What do you think about this case? Let us know in the comments section below.

Tags in this story

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Read disclaimer

Articles You May Like

6 Questions for Olga Kupchevskaya of MyEtherWallet
A Look at How Buckminster Fuller Predicted Bitcoin: ‘A Realistic, Scientific Accounting System of What Is Wealth’
Traders pin Ethereum’s route to new ATH to eventual Bitcoin ETF approval exchange debuts Bitcoin margin trading
Elon Musk’s Tesla is already $1 billion in profit from holding Bitcoin