Bitwise Executives Hit with Charges by SEC Alleging Falsification of Documents, Criminal Charges Also Filed

The Securities and Exchange Commission (SEC) has filed charges against former Bitwise Executives Jake Soberal and Irma Olguin, Jr. The SEC claims that the former co-CEOs of Bitwise misled investors about the company’s finances. The SEC adds that both Soberal and Olguin have agreed to resolve the charges against them.

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 US Attorney has charged Soberal and Olguin with conspiracy to commit wire fraud and taking over $100 million from various parties.

US Attorney Phillip A. Talbert said Soberal and Olguin could have chosen to admit the failure of Bitwise, but instead, they lied to pull over $100 million into a dying venture through fraud.

“Olguin, Jr. and Soberal fabricated bank statements, lied to investors, provided false financial information to their board of directors, forged documents, and used buildings Bitwise no longer even owned as collateral for loans, all while lining their own pockets.  Our office will continue to investigate and prosecute those responsible for such financial crimes, and we are grateful for the hard work of the FBI and IRS Criminal Investigation, as well as the civil enforcement work of the United States Securities and Exchange Commission,” said Talbert.

Both Soberal and Olguin self-surrendered yesterday and appeared before a Federal Magistrate in Fresno.

The SEC’s complaint alleges the two former executives falsified documents regarding Bitwise’s cash and financial performance as they sought to raise $70 million from investors in 2022. The complaint alleges that investors were provided falsified bank records and a fake audit report that showed inflated cash balances and higher revenues than Bitwise actually generated.

Apparently, while sharing information that indicated a strong financial performance, the opposite was true, as Bitwise was short on cash and “often on the brink of failure.” Things took a turn for the worse in May 2023 when Bitwise failed to make payroll and soon terminated all of its employees.

Monique C. Winkler, Regional Director of the SEC’s San Francisco Regional Office, pointed to one example where Soberal and Olguin presented a screenshot of a bank account with over $23 million in cash, but in reality, it held just $325,100.

The SEC’s complaint charges Soberal and Olguin with violating the antifraud provisions of the federal securities laws. Both of the executives 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.

The SEC’s investigation is ongoing.

If convicted of the criminal charges, Olguin and Soberal each face a maximum statutory penalty of 20 years in prison and a $250,000 fine.

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