According to court documents, the founders of Bitqyck had raised $24 million from over 13,000 investors and used funds for personal expenses like trips and cars.
DALLAS — Two owners of a cryptocurrency company have been sentenced to prison for tax evasion after the case was heard in a federal court in Texas, officials announced Thursday.
Chad E. Meacham, acting U.S. attorney for the Northern District of Texas, announced that the owners of Bitqyck were sentenced to a combined eight years.
Bruce Bise, 61, and Samuel Mendez, 65, were charged with tax evasion in August 2021, and both pleaded guilty months after being charged. Bise was sentenced to 50 months earlier this week, while Mendez was sentenced to 50 months on Thursday.
Court documents stated the two admitted to raising $24 million from over 13,000 investors but used those funds for personal expenses, such as trips, cars and luxury home furnishings.
“Not only did these defendants shirk their tax obligations, they lied to investors and made off with their millions,” Meacham said in a statement.
Bise and Mendez both entered plea deals after a civil settlement with the Securities and Exchange Commission that led to an agreement to pay a $8.3 million penalty to resolve fraud claims, according to a news release from the Department of Justice.
According to the DOJ, the two owners began promoting their cryptocurrency, Bitqy, in 2016 and held an initial coin offering, which is when a company raises capital by selling a new cryptocurrency.
The DOJ said Bise and Mendez then began marketing another token, BitqyM, just nine months later. Investors were told the token would let them join in Bitcoin mining operations through a Bitqyck mining facility in Washington state.
The two owners later admitted there was never such a facility. Instead, the DOJ stated that the two used an overseas third-party company to mine Bitcoin.
According to the DOJ, Bise and Mendez both underreported their incomes to the IRS in 2016 and 2017 and that their company did not file any corporate tax returns in 2018.
“These criminals committed this scheme to thoroughly deceive and defraud stakeholders and the taxpaying public by cheating cryptocurrency investors,” said Christopher J. Altemus Jr., special agent in charge at the Dallas FBI field office.