BitFunder Founder Pleads Guilty to Charges of Fraud and Obstruction of Justice

Published at: July 24, 2018

The operator of now defunct Bitcoin (BTC) stock exchange BitFunder has pleaded guilty to federal charges of obstruction of justice and securities fraud, Reuters reports July 23.

According to prosecutors, 37-year old Jon Montroll, also known as Ukyo, also pleaded guilty to obstruction of justice, admitting that he provided false balance statements to the U.S. Securities and Exchange Commission (SEC) in an investigation of the fake 6,000 BTC BitFunder hack in 2013.

Montroll, of Saginaw, Texas, operated BitFunder, where users could sell virtual shares of businesses for bitcoins, as well as Bitcoin exchange and depository WeExchange Australia Pty Ltd. Montroll took WeExchanges users’ bitcoins and sold them for fiat currency, which he subsequently spent on personal expenses.

In July 2013, Montroll also started soliciting investments in a security that he dubbed Ukyo.Loan, promising daily interest and an easy redemption process. However, after the 6,000 BTC hack, Montroll was unable to pay owed amounts to Ukyo.Loan investors or WeExchange and BitFunder clients. Montroll continued to solicit investments without disclosing hack information.

In February, the SEC and the Department of Justice (DOJ) officially filed charges against Montroll, accusing him of operating an unregistered securities exchange, defrauding users of said exchange, and making “false and misleading statements in connection with an unregistered offering of securities.” The cyberattack in question led to the loss of more than 6,000 BTC, then worth around $720,000, and today over $45 million.

Earlier this month, Cointelegraph reported that the alleged former operator of BTC-e crypto exchange, Alexander Vinnik, was ruled to be extradited to France by a Greek court. Vinnik, also known as “Mr. Bitcoin,” was indicted by U.S. authorities on fraud and money laundering charges in 2017, reportedly involving up to $4 billion in Bitcoin.

Tags
Bitcoin
United States
Sec
Government
Court
Fraud
Bitcoin Scams
Related Posts
Texas Regulator Spots Crypto Firm at Fraudulent COVID-19 Charity Claims
The Texas securities regulator has continued its crackdown on cryptocurrency scams, spotting an alleged fraudulent crypto firm that made fake claims about COVID-19 donations. On April 8, the Texas State Securities Board (TSSB) issued an emergency cease and desist order against Ultra Mining, alleging that the crypto mining firm is involved in diverse illicit activities including purportedly fraudulent claims to double investors’ money. As specified in an official TSSB notice, the Texas action was brought jointly with the Alabama Securities Commission to stop the ongoing illegal offering. According to the order, Ultra Mining is promising some “eye-opening returns.” As such, …
Bitcoin / April 8, 2020
US SEC Files Charges Against Bitcoin-Backed Securities Dealer
The U.S. Securities and Exchange Commission (SEC) has filed charges against international securities dealer 1pool Ltd., which was offering Bitcoin-funded security-based swaps, according to an SEC announcement published September 27. Per the SEC, the case involves the Marshall Islands-based corporation 1pool Ltd., which provides cryptocurrency-related services and stands behind 1broker.com, and its Austria-based CEO Patrick Brunner. The complaint alleges that the parties violated federal securities laws in connection with security-based swaps funded with Bitcoin (BTC). The complaint was filed in the U.S. District Court for the District of Columbia and seeks permanent injunctions, disgorgement plus interest, and penalties. The SEC …
United States / Sept. 28, 2018
SEC brought 56 cases against crypto-related firms during Jay Clayton’s tenure
The United States Securities and Exchange Commission has brought 56 enforcement actions against initial coin offerings, blockchain and digital asset-related companies since July 2017. On Nov. 16, the SEC released a report on the commission’s selected accomplishments during chairman Jay Clayton’s tenure from May 2017 until November 2020. As part of the 28-page report, the regulator mentioned the SEC’s efforts to combat “cyber-related misconduct” including violations by companies involved in the crypto industry. According to the report, the SEC brought 56 cases involving attempts to defraud investors through the use of digital asset securities as well as violations of the …
Bitcoin / Nov. 17, 2020
Co-Founder of Now-Defunct BitFunder Gets 14 Months Imprisonment
The operator of now-defunct Bitcoin (BTC) exchange BitFunder, Jon Montroll, has received a 14 months prison sentence following federal charges of obstruction of justice and securities fraud, finance and trading industry news outlet FinanceFeeds reported on July 12. The proceedings against Montroll began last year. In July 2018, Montroll pleaded guilty to obstruction of justice, admitting that he provided false balance statements to the United States Securities and Exchange Commission in an investigation of the fake 6,000 BTC BitFunder hack in 2013. The proceedings against Montroll ended on July 11, 2019, wherein Judge Richard M. Berman of the New York …
United States / July 12, 2019
US SEC Halts Fraudulent ICO That Claimed to Possess Regulator’s Approval
The U.S. Securities and Exchange Commission (SEC) has halted a planned Initial Coin Offering (ICO) that falsely claimed have SEC approval, the agency reported in an official press release Thursday, Oct. 11. The SEC suspended the ICO project with an emergency court order, and also halted pre-ICO sales by the company Blockvest LLC, and its founder Reginald Buddy Ringgold III. The complaint by the SEC alleges that Blockvest falsely claimed that their ICO and affiliates had acquired approval from major financial regulators, including the SEC itself. Blockvest and Ringgold — who also goes by the name Rasool Abdul Rahim El …
United States / Oct. 11, 2018