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Former Bitwise Industries Co-CEOs Charged by SEC for Misleading Investors

SEC, Securities and Exchange Commission

The Securities and Exchange Commission (SEC) has announced charges against the former co-CEOs of Bitwise Industries, a private technology services startup based in Fresno, California. 

The charges against Jake Soberal and Irma Olguin Jr. stem from allegations of misleading investors about the company’s finances, the SEC said in a Thursday (Nov. 9) press release

Soberal and Olguin are accused of making material misrepresentations and falsifying documents regarding Bitwise’s cash position and historical financial performance, according to the release. The complaint alleges that the former co-CEOs raised approximately $70 million from investors in 2022 by providing falsified bank records and a fake audit report. These documents purportedly showed inflated cash balances and higher revenues than Bitwise actually generated, presenting the company as financially healthy and growing.

Contrary to the misrepresentations made by Soberal and Olguin, Bitwise was allegedly facing constant cash shortages and was on the verge of failure due to an inability to generate sufficient funds from its operations, per the release. The scheme came to light in May when Bitwise failed to meet payroll obligations and subsequently furloughed and terminated all of its personnel.

Monique C. Winkler, regional director of the SEC’s San Francisco Regional Office, said in the release that Soberal and Olguin engaged in blatant fraud, resorting to the creation of fake financial documents to deceive investors and raise money. 

The SEC has filed a complaint in the U.S. District Court for the Eastern District of California, charging the former co-CEOs with violating the antifraud provisions of federal securities laws, according to the press release. 

The proposed resolution involves Soberal and Olguin agreeing to the entry of a partial judgment, subject to court approval, the release said. This judgment would impose permanent and conduct-based injunctions, as well as an officer and director bar. The issues of disgorgement, prejudgment interest and a civil penalty will be determined by the court at a later stage.

Additionally, the U.S. Attorney’s Office for the Eastern District of California has announced criminal charges against Soberal and Olguin parallel to the SEC’s actions, per the release.

In another action taken earlier this year, the SEC charged cannabis company American Patriot Brands with fraud, alleging that it made false and misleading statements to investors.

“As the SEC complaint alleges, American Patriot Brands Inc. and some of its senior executives fabricated business profits and prospects to entice investors with falsehoods that in the end left investors with essentially worthless securities,” Carolyn M. Welshhans, associate director of the SEC’s enforcement division, said at the time.