The founders of a crypto startup pleaded guilty to tax evasion as part of an initial coin offering (ICO) in 2016.
Bruce Bise, 60, and Samuel Mendez, 65, face up to five years in federal prison in connection with the Bitqyck ICO, which raised $ 24 million, the US district attorney for the North District said on Wednesday. from Texas.
Bise pleaded guilty on September 9 and Mendez on October 13, according to the department.
The duo allegedly scammed investors out of their funds, using the ICO’s income for casino trips, cars, artwork, rents and luxury home renovations.
The pair also promised investors who buy Bitqy tokens that they will receive common stock in the company, although no such issue has ever been made. At the time of the pleadings, Bise and Mendez own 100% of the common shares of Bitqyck.
Less than a year after Bitqyck’s ICO in 2016, Bise and Mendez began promoting a new coin, BitqyM, which is supposed to power bitcoin mining operations in Washington state. Bise and Mendez admitted in advocacy documents that no such transaction ever existed, and they had unsuccessfully attempted to contract a third-party foreign company to mine the promised bitcoin.
Bitqyck paid a fine of $ 8.3 million to resolve allegations it defrauded investors in a civil regulation with the Securities and Exchange Commission (SEC) in August 2019.
From 2016 to 2018, Bise and Mendez profited from a combined amount of $ 9.16 million, but after underreporting their income, combined with the fact that Bitqy did not file its tax returns in 2018 despite the raising $ 3.5 million from investors, the founders must pay more than $ 1.6 million. combined taxes.
Bise and Mendez face up to five years in federal prison, prosecutors say.