The founder of now defunct securities investment platform BitFunder and crypto exchange WeExchange, Jon Montroll, has pleaded guilty to federal charges that he stole his customers’ deposits and lied to US regulators investigating hackers’ theft of virtual currency.
The US Attorney for the Southern District of New York said in a statement on Monday that Montroll, who was arrested in February, pled guilty to one count of securities fraud and one count of obstruction of justice. Each charge carries a maximum penalty of 20 years in prison.
BitFunder, which allowed users to sell virtual shares of business entities in exchange for Bitcoins (BTC), appeared in 2012 and was shut down only a year later. Describing Montroll’s wrongdoing, the prosecutors said that during that time he used the platform to defraud investors of their cryptocurrency and “converted a portion of WeExchange users' Bitcoins to his personal use without the users' knowledge or consent”.
In July 2013, Montroll solicited investments in a security called Ukyo.Loan, promising investors that they would earn interest daily and could redeem their shares at any time. Later the same year, hackers exploited a weakness in the BitFunder programming code and stole 6,000 BTC — worth around $48 million at current prices — from WeExchange, leaving Montroll unable to pay what he owed Ukyo.Loan investors and users of WeExchange and BitFunder. However, Montroll failed to report the breach and continued to solicit investments.
Montroll subsequently came under investigation by the US Securities and Exchange Commission (SEC) and lied to investigators about when he learned of the hack and the number of Bitcoins available to BitFunder and WeExchange users after the theft.
“As he admitted today, Jon Montroll deceived his investors and then attempted to deceive the SEC. He repeatedly lied during sworn testimony and misled SEC staff to avoid taking responsibility for the loss of thousands of his customers' Bitcoins,” Manhattan US Attorney Geoffrey Berman stated on Monday.
This article appeared first on Cryptovest
