Bitwise Judgment Comes Down: SEC Ruling Bans Soberal from Work with Securities - GV Wire - Explore. Explain. Expose
Connect with us

Bitwise

Bitwise Judgment Comes Down: SEC Ruling Bans Soberal from Work with Securities

Published

on

A federal judge issued a judgment against former Bitwise co-CEO Jake Soberal on Feb. 1, 2024. It bans him from being an officer in a company that issues securities. (GV Wire Composite/Paul Marshall)
Share with friends

A federal judge has issued a judgment in the Security and Exchange Commission’s case against Bitwise’s co-CEO Jake Soberal, banning him from leading a company that issues securities.

In the Feb.1 settlement, Soberal — among other orders — waives the right to any defense, said Fresno attorney Roger Bonakdar.

Bonakdar represents 900 Bitwise employees in a class-action lawsuit. The suit alleges that the employees were defrauded by Soberal and the firm’s other former co-CEO, Irma Olguin, Jr.

“The most, in my view, significant parts of (the judgment) are that he is agreeing to not be a director or owner of a business in which a security is issued,” Bonakdar said. “So that keeps him from being materially involved in a publicly traded company or a private company which is doing exactly what Bitwise did, and that was raise money.”

Following the judgment will be a master settlement agreement with further terms the SEC may or may not release, Bonakdar said. A proposed judgment issued in January named both Soberal and Olguin. Bonakdar expects another similar judgment to be issued against Olguin.

Soberal Can’t Argue Against SEC’s Allegations

The SEC alleged that Soberal and Olguin falsified and misrepresented documents about Bitwise’s financial position when they raised $70 million from investors in 2022.

Click here for GV Wire’s coverage of Bitwise.

The Fresno-based tech company furloughed all of its 900 employees in May 2023. Less than a month later, the company filed for Chapter 7 bankruptcy.

The Bitwise board also fired Soberal and Olguin. Following the debacle, at least three cases were brought against Soberal and Olguin, including criminal charges from federal investigators, a civil case from employees and shareholders, and the one from the SEC.

The complaint states that Soberal and Olguin manufactured fake bank records and a fake audit report they used to persuade investors to give the company money.

“Soberal and Olguin’s alleged misrepresentations and falsified materials painted Bitwise as a healthy, growing business with favorable financial performance,” according to the SEC’s complaint. “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.”

Soberal cannot dispute the allegations, according to the terms of the judgment.

“It would be like going to trial on an auto accident case where the question is who ran the red light and who caused the accident,” Bonakdar said. “He’s saying, ‘I ran the red. I caused the accident.’ ”

Judgment Limits Soberal’s Future Employment

Securities are tradable financial assets that can be deposited or pledged as a guarantee of fulfilling an undertaking or repaying a loan. They can be equities or bonds or even mortgages, Bonakdar said.

The terms of the judgment involving Soberal do not state how long the ban will last. Bonakdar said that often judgments such as these have a time limit.

“The point of the SEC action is to take him out of the game for any company which raises money or sells stock,” Bonakdar said. “That doesn’t mean he can’t get a job punching a clock somewhere, or, you know, starting a business where there is no ownership interest outside of him and a partner.”

However, the judgment would prevent him from starting another company like Bitwise.

Status of Soberal’s Law License

Soberal’s license to practice law has lapsed, according to the California Bar Association. While it could theoretically be renewed, Bonakdar said an inquiry would probably have to be done considering the criminal charges.

Any law firm considering Soberal for employment also would likely conduct a background check on him.

“Jake’s Google results are not going to be very kind for a while,” Bonakdar said.

 

Edward Smith began reporting for GV Wire in May 2023. His reporting career began at Fresno City College, graduating with an associate degree in journalism. After leaving school he spent the next six years with The Business Journal, doing research for the publication as well as covering the restaurant industry. Soon after, he took on real estate and agriculture beats, winning multiple awards at the local, state and national level. You can contact Edward at 559-440-8372 or at Edward.Smith@gvwire.com.