BitFunder operator pleads guilty to fraud charges

July 24, 2018
Chris Wheal

The head of two now-defunct cryptocurrency exchange services has pleaded guilty to several charges including that of securities fraud which could land him as much as 20 years in jail.

Jon Montrell pleads guilty to charges of fraud and obstruction

Jon Montroll of Saginaw Texas, who operated WeExchange, a cryptocurrency depository and exchange, and BitFunder, which traded in virtual shares, admitted to taking his customers’ deposits and being unable to repay them after hackers raided BitFunder.

Summer of 2013

The charges go back to the summer of 2013, when a single bitcoin could be purchased for between $100 and $130. Montroll had already converted a number of bitcoins belonging to WeExchange customers into dollars and embezzled them.

But, prosecutors said, after hackers found a vulnerability in BitFunder’s coding to steal around 6,000 bitcoins, Montroll continued to raise bitcoins without telling customers about the attack, knowing he could not repay existing customers.

Obstruction of SEC probe

He raised a further 978 bitcoins by promoting both platforms as successful, and obstructed Securities and Exchange Commission (SEC) efforts to investigate the hack – showing the regulator fake data on the number of bitcoins available to users.

The 37-year old who was also known as Ukyo pleaded guilty to securities fraud and obstruction of justice, admitting to showing false balance statements to the SEC. He is to be sentenced at an unspecified future date by US District Judge Richard Berman.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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