Two founders of a cryptocurrency firm that defrauded investors are facing up to half a decade in prison for tax evasion.
According to the U.S. Attorney’s Office in the Northern District of Texas, Bruce Bise and Samuel Mendez founded crypto company Bitqyck and held an initial coin offering (ICO) in 2016, raising approximately $24 million from over 13,000 investors.
The Internal Revenue Service (IRS) reveals that the crypto firm and its two co-founders underreported income from the proceeds of the ICO, leading to tax losses running into hundreds of thousands of dollars.
“For 2016 and 2017, Mr. Bise underreported his income to the IRS, resulting in a tax loss of $371,278.
For that same period, Mr. Mendez also underreported his income to the IRS, resulting in a tax loss of $311,155.”
In their pitch to investors, Bise and Mendez promised that the company’s token known as Bitqy (BQ) would enable those who had missed out on a Bitcoin (BTC) rally to make money too.
The two co-founders of Bitqyck further defrauded investors by marketing another Bitcoin-mining focused token known as BitqyM.
In both cases, Bise and Mendez “profited from Bitqyck by diverting income from the company for their personal use at their shareholders’ expense.”
The U.S. Securities and Exchange Commission (SEC) initially charged the pair for fraud in August of 2019. Bitqyck reached an $8 million-plus settlement with the SEC while the two co-founders collectively settled for over $1.7 million.
After underreporting income and pleading guilty to tax evasion, Bise and Mendez are now facing a prison sentence of up to half a decade.
“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.
Both men now face up to five years in federal prison.”Don't Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Check Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured Image: Shutterstock/alphaspirit.it