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A Dallas firm and its founders have been charged by the U.S. Securities and Exchange Commission (SEC) in connection with operating an unregistered digital asset exchange.

In the latest example of the regulator taking action against unregistered operators, the SEC filed charges against Bitqyck Inc. and its founders.

The charges also included allegations in connection with the unregistered offering of two digital assets, namely Bitqy and BitqyM, and include founders Bruce Bise and Sam Mendez — personally, in addition to the company.

Further to the charges being published Thursday, the SEC confirmed the action has been settled in the amount $8.4 million, with the founders each stumping up $890,254 (Bise) and $850,022 (Mendez) respectfully.

Per the SEC charges, the firm is accused of raising $13 million from its unregistered security offerings, which saw investors collectively lose over two-thirds of the money invested.

A press release published by the SEC went on to outline other allegedly false representations made Bitqyck to its investors.

“The SEC’s complaint alleges that Bise and Mendez misrepresented QyckDeals, a daily deals platform using Bitqy, as a global online marketplace, and falsely claimed that each Bitqy token provided fractional shares of Bitqyck stock through a “smart contract.” The complaint alleges that the defendants falsely told investors that BitgyM tokens provided an interest in a Bitqyck cryptocurrency mining facility powered by below-market rate electricity.”

In reality, Bitqyck did not have access to discounted electricity and didn’t own any mining facility. Bitqyck, aided and abetted by its founders, also is alleged to have illegally operated TradeBQ, an unregistered national security exchange offering trading in a single security, Bitqy.

Director of the SEC Fort Worth Regional Office, David Peavler, said the case was a warning to crypto investors not to get too carried away with speculative tokens.

“Because digital investment assets represent a new and exciting technology, they can be very alluring, especially if investors believe they are getting in on the ground floor and will own part of the operations,” he noted. “We allege that the defendants took advantage of investors’ appetite for these investments and fraudulently raised millions of dollars by lying about their business.”

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