Sec Cryptocurrency SEC Charges Former Co-CEOs of Tech Start-Up Bitwise Industries for Falsifying Documents While Raising $70 Million From Investors

The Securities and Exchange Commission today announced charges against Jake Soberal and Irma Olguin, Jr., the former co-CEOs of Fresno, California-based private technology services startup Bitwise Industries Inc., for misleading investors about the company’s finances. Soberal and Olguin have agreed to resolve the charges against them.

The SEC’s complaint alleges that Soberal and Olguin made material misrepresentations and falsified documents concerning Bitwise’s cash position and historical financial performance while raising approximately $70 million from investors in 2022. According to the complaint, Soberal and Olguin created and provided investors with falsified bank records and a fake audit report that showed, respectively, inflated cash balances and higher revenues than Bitwise actually generated. Soberal and Olguin’s alleged misrepresentations and falsified materials painted Bitwise as a healthy, growing business with favorable financial performance. In reality, and as Soberal and Olguin allegedly knew, Bitwise faced constant cash shortages and was often on the brink of failure because it was unable to generate sufficient funds from its operations. As alleged, Soberal and Olguin’s scheme came to light in May 2023 when Bitwise failed to make payroll and abruptly furloughed—and then terminated—all of its hundreds of personnel.

“We allege that Soberal and Olguin resorted to blatant fraud, including the creation of fake financial documents, to deceive investors and raise money,” said Monique C. Winkler, Regional Director of the SEC’s San Francisco Regional Office. “In one instance, the defendants allegedly conspired to send a purported screenshot to investors of a company bank account showing a cash balance of $23.4 million. In actuality, the account had only $325,100 in it. That’s not a bank error—that’s fraud, and the SEC is taking action to hold the defendants accountable.”

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of California, charges Soberal and Olguin with violating the antifraud provisions of the federal securities laws. Soberal and Olguin have each agreed to the entry of a partial judgment, subject to court approval, imposing permanent and conduct-based injunctions as well as an officer and director bar, and reserving the issues of disgorgement, prejudgment interest, and a civil penalty for further determination by the court.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of California (USAO) today announced criminal charges against Soberal and Olguin.

The SEC’s investigation, which is ongoing, is being conducted by Drew Liming and John Roscigno, under the supervision of Rahul Kolhatkar and Jason H. Lee, all of the SEC’s San Francisco Regional Office. The litigation will be conducted by Marc D. Katz and Mr. Liming. The SEC appreciates the assistance of the U.S. Attorney’s Office, the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigation.