The two perpetrators were charged for tax evasion and deceiving investors by misspending $24 million raised from the initial coin offering.
Throughout the past couple of months, US law enforcement agencies have sentenced several individuals involved in cryptocurrency scams, Ponzi schemes, rug pulls, with the latest charge being tax evasion.
Based on the report by the Department of Justice (DoJ), the two founders of Bitqyck Bruce Bise and Samuel Mendez have pleaded guilty to tax evasion. Each of them was given 50 months in prison.
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The case dates back to 2016, with Bitqyck advertising its native token as "the new Bitcoin", and pulling in over 13,000 investors. In fact, each investor was promised a fraction of Bitqyck’s shares. However, that turned out not to be true since the two founders admitted that no shares of the company were given out.
In order to avoid paying taxes, Bise and Mendez claimed, at the time, that the native tokens (Bitqy’s) were kind of like bonus gifts that investors received for making online purchases. The truth was that the tokens were purchased from the initial coin offering (ICO), with investors hoping that the price of Bitqy would take off at some point
Later on, the two founders launched another token called BitqyM which was promised to be a token that supports the company’s crypto mining operations. However, just like earlier promises, these operations were never in place.
Special Agent in Charge of IRS-CI’s in LA Ryan L. Korner spoke on the specifics of the case, stating:
"By misrepresenting unregistered securities to investors who were lured with the appeal of owning shares of interest in a new and exciting marketplace, the defendants took advantage of unsuspecting individuals and defrauded them out of millions of dollars."
The two co-founders managed to get their hands on over $8 million during the period from 2016 to 2018. The IRS estimated that both of them owe $1.6M in tax to the United States government.
Just last week, the CFTC charged 4 individuals for a $44M Bitcoin Ponzi scheme, and on March 9th, two siblings were charged for an alleged $124 million crypto fraud.
