Regulation News

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.

Smart contracts and crypto mining?

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.

Losses and settlement fees

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 Chair won’t make exceptions for digital assets

As previously reported by Cointelegraph, 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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