The US Securities and Exchange Commission (SEC) has accused two former CEOs of collapsed California-based tech company Bitwise Industries, of alleged misrepresentation and fraud, which they used to raise funds from unsuspecting investors.

The defunct company is not associated with the major crypto asset manager, Bitwise, even though both entities bear identical names.

Former Bitwise Industries Founders Charged With Fraud

In a press release published on Nov. 9, 2023, the alleged fraudulent scheme by Bitwise Industries co-founders and co-CEOs Jake Soberal and Irma Olguin became exposed in May 2023 after the company failed to pay its employees and furloughed all its workers – around 900 of them – who were later dismissed. The startup’s board of directors also fired the CEOs.

According to the SEC, Soberal and Olguin made false representations of the company’s financial health, going as far as providing forged audit reports and bank statements to investors in a bid to portray the startup as a thriving business with an impressive financial outlook. On the contrary, Bitwise Industries faced liquidity issues and was unable to generate adequate funds.

In a statement by the Regional Director of the SEC’s San Francisco regional office, Monique C. Winkler, there was an instance where Soberal and Olguin “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 a fraud, and the SEC is taking action to hold the defendants accountable.”

The duo’s fraudulent act enabled them to raise around $70 million from investors. The SEC is accusing the co-CEOs of “violating the anti-fraud provisions of the federal securities laws.” Meanwhile, the Bitwise Industries founders agreed to settle the charges against them, as stated in the press release.

Bitwise Asset Management Not Related to Bitwise Industries

Also, the US Attorney’s Office for the  Eastern District of California