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Steve Kaaru

Bitfunder CEO sentenced to 14 months in prison

The co-founder and CEO of the now-defunct Bitfunder.com has been sentenced to 14 months in prison. Jon Montroll operated two crypto-related services in 2013 in which he received money from investors but used a portion of it to fund his own lifestyle. Further, he obstructed justice by knowingly lying to the Securities and Exchanges Commission (SEC) about the state of his firms’ accounts.

Montroll, better known as Ukyo, founded and operated two services, the first of which was WeExchange Australia, Pty. Ltd. This served as a SegWitCoin (BTC) depository and currency exchange service. The second more renowned service was Bitfunder, a platform that facilitated the purchase and sale of virtual shares of businesses.

The press release by the U.S. Department of Justice (DOJ) also revealed that Montroll promoted a security he referred to as Ukyo Loan. He described the loan as an investment in both his platforms and also a personal and investment loan. He promised his clients daily interest and assured them that they could redeem their loans for fiat at a moment’s notice.

However, during the summer of 2013, hackers attacked Bitfunder and took control of the platform for close to a month. They emptied most of the firm’s accounts, withdrawing approximately 6,000 BTC, with a majority of these being withdrawn between July 28 and July 30, 2013.

And this wasn’t all. Montroll used the money from the investors for his own needs. The DOJ revealed that he “exchanged numerous bitcoins taken from WeExchange into United States dollars, then spent those funds on personal expenses, such as travel and groceries.”

Despite the hack, the 38-year-old Texas native reportedly failed to notify the investors. Instead, he continued to promote his platforms, raising even more money from investors. The DOJ revealed that he raised 918 BTC after discovering the exploit.

The U.S. Attorney for the Southern District of New York Geoffrey Berman stated, “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.”

In addition to his 14-month prison sentence, Montroll will serve three years of supervised release and pay a $167,480 forfeiture.

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