Bitwise Co-Founders Charged with $100 Million Fraud

Published 6 months ago

In a recent development in California, the co-founders and former co-CEOs of the now-defunct startup Bitwise, Irma Olguin, Jr and Jake Soberal, have been accused of defrauding investors of $100 million. The allegations claim the pair fabricated financial documents, including bank statements and revenue reports, to mislead investors and secure funding for the struggling company.

The Alleged Scheme

According to the Department of Justice, the fraudulent activity began in January 2022, as the co-founders conspired to present false financial information to the company’s board, investors, and banks. This was purportedly done to attract venture capital and loans under the guise of a flourishing business. The reality, as presented by prosecutors, was a series of forged financial records designed to inflate Bitwise’s financial health.

The Collapse of Bitwise

Bitwise’s troubles became apparent when the company laid off its entire workforce of 900 employees in May and filed for bankruptcy by the end of June. This dramatic downfall followed a period of optimistic expansion plans, including a significant funding round and a valuation of over $500 million. The startup, which began with a mission to foster tech job creation in under-served communities, failed to deliver on its promises and instead is accused of misallocating funds.

SEC Involvement and Charges

The US Securities and Exchange Commission has also stepped in, charging Olguin and Soberal with misleading investors about Bitwise’s financial status. The SEC alleges that in 2022, approximately $70 million was raised through deceptive means. The co-founders have agreed to settle the SEC’s charges, which could result in fines and other penalties.

Potential Consequences for Olguin and Soberal

With the criminal case unfolding, Olguin and Soberal could face severe legal consequences if convicted. The charges carry a maximum sentence of 20 years in prison and a fine of $250,000. The case stands as a stark warning against corporate misrepresentation and the importance of ethical business practices.