BitFunder exchange was founded by Jon Montrol in 2012 but is now defunct. As of now, the founder who also operated WeExchange, the interconnected deposit service, has faced the received judgment for securities fraud and obstruction of justice. His sentence was made known via a statement from the Southern District of New York.
The bitcoin-denominated trading platform founder is to serve 14 months in prison for defrauding investors of his scheme called “Ukyo.Loan”. Montrol who is from Saginaw, Texas was operating as an exchange in disguise till he transferred investors’ funds without their knowledge or permission. He also lied to Federal Bureau of Investigation (FBI) and Securities Exchange Commission (SEC) agents during their investigation earning him the charge for obstruction added to his fraudulent activities.
Geoffrey S. Berman, a Manhattan U.S. Attorney said:
“Jon Montroll lied to his investors and, after his lies caught the attention of the SEC, lied to them, too. The sentence he received serves as a reminder that this Office will not overlook those who violate their obligation to be honest with investors and the regulators working to protect them.”
BitFunder’s software was said to be hacked in July 2013 consequently 6,000 bitcoin from Montrol’s companion fiat-to-crypto platform, WeExchange was claimed to have been stolen. Montrol’s integrity had already been questionable from the DOJ’s statement that indicated he didn’t report the loss investors or regulatory authorities. Allegedly as well, he promoted the operation as “commercially successful” instead of insolvent in one incident.
The ‘CEO’ had made claims of a similar feat to the FBI and “provided the SEC with a falsified screenshot” of investor’s holdings when the investigations started. Montrol continued in falsehood as he testified on the stand “materially false and misleading answers” regarding his businesses and the hack. During the investigation, it was also found that Montrol used WeExchange as a personal bank. At the time, the attorney’s office wrote: “Montrol exchanged numerous bitcoins taken from WeExchange into United States dollars, then spent those funds on personal expenses, such as travel and groceries.”
Before BitFunder was shut down, CEO Montrol began offering Ukyo.Loan, a new product he had described as a “round-about investment.” According to attorneys, he had referred to these investments as “a personal loan.” His businesses then became insolvent but he still advertise Ukyo.Loans that earned him 978 bitcoin.
Attorneys also noted that Montrol referred to the investments as Despite his businesses’ insolvency, Montrol continued to The case has been ongoing for quite a while; by July 2018, Montrol had pleaded guilty for such activities. Three years of supervised release was also ordered to the Montrol and a fine of $167,480 was added to that as well.
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