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U.S. Arrests Operator of Shuttered Bitcoin Investment Platform

U.S. Arrests Operator of Shuttered Bitcoin Investment Platform

Federal prosecutors in Manhattan announced the charges against BitFunder founder Jon Montroll the same day the U.S. Securities and Exchange Commission filed a lawsuit accusing him and the company of running an unregistered securities exchange that defrauded its users.

"As alleged, the defendant repeatedly lied during sworn testimony and misled SEC staff to avoid taking personal responsibility for the loss of thousands of his customers' bitcoins," Manhattan U.S. Attorney Geoffrey Berman said in a statement.

Prosecutors said Montroll operated WeExchange Australia Pty Ltd, which functioned as a bitcoin depository and exchange service, and BitFunder.com, which allowed users to sell virtual shares of business entities in exchange for bitcoins.

Due to the hacking, BitFunder and WeExchange lacked enough bitcoins to cover what Montroll owed users, prosecutors said. Yet they said that during a subsequent SEC probe, Montroll denied that the exploit the hackers used had been successful

Prosecutors said that he also produced to the SEC a screenshot that falsely represented how many bitcoins were available to BitFunder users as of October 2013.

He later transferred some of his own bitcoins into WeExchange to conceal the losses, prosecutors said. BitFunder shut down in 2013.

At the time, the more than 6,000 bitcoins the hackers stole were worth about $775,075, the SEC said in its lawsuit. Today, those bitcoins are worth about $69.6 million, according to the criminal complaint.

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