The owners of crypto company Bitqyck have pleaded guilty to tax evasion following a $24 million raise from investors. According to the US Department of Justice (DOJ) Bitqyck founders Bruce Bise and Samuel Mendez were charged with tax evasion in August, and have pleaded guilty to tax evasion and defrauding their investors.
Founders of fraudulent cryptocompany Bitqyck Bruce Bise and Samuel Mendez held the initial coin offering for Bitqyck in 2016, as a way for “those individuals who missed out on Bitcoin” to get rich, according to the DOJ.
Despite the Bitqyck Whitepaper promising that each Bitqy token came with 1/10th of a share of Bitqyck common stock, the two founders admitted that they never distributed shares to token holders or embedded the shares within the Ethereum Smart Contract.
Acting U.S. Attorney Chad Meacham noted in the press release:
“Transacting in virtual currencies does not exempt businesspeople from paying income taxes,” “These crypto-savvy defendants exploited an emerging technology, lying to their investors, pocketing the proceeds, and concealing the income from the IRS. The Department of Justice is committed to ensuring that every taxpayer pays his or her fair share – and to protecting the crypto space from bad actors.”
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.
Following their Bitqy launch, Bise and Mendez launched another token called Bitqym, which would enable investors to participate in mining operations. However, these mining operations did not exist, as the pair admitted in court.
Bitqyck recently resolved a civil settlement with the SEC, in which they agreed to pay an $8.3 million penalty, and their latest legal ruling will see them facing possible prison sentences for tax evasion of up to five years.
The US government’s crackdown on cybercrime, particularly ransomware attacks, has stepped up in recent months following a number of attacks that extorted money from major companies in the US. Senator Elizabeth Warren recently introduced The Ransom Disclosure Act as part of the US administration’s efforts to make stopping ransomware and cybercrime a national security.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.