Date
21 October 2018
The man behind crypto platform WeExchange and investment site BitFunder has pleaded guilty to securities fraud and obstruction of justice charges in the US. Photo: Reuters
The man behind crypto platform WeExchange and investment site BitFunder has pleaded guilty to securities fraud and obstruction of justice charges in the US. Photo: Reuters

Operator of defunct crypto platform pleads guilty to US charges

The operator of a shuttered bitcoin-denominated exchange pleaded guilty on Monday in the United States to charges of securities fraud and obstruction of justice.

Jon Montroll, 37, pleaded guilty to federal charges that he defrauded investors and lied to US securities regulators who had been investigating a hacker theft of virtual currency now worth about US$46 million, Reuters reports.

Montroll, of Saginaw, Texas, operated WeExchange Australia, 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.

According to prosecutors, Montroll defrauded investors by taking WeExchange users’ bitcoins for himself, selling them for dollars and spending them on personal expenses.

The activity was said to have taken place between the launch of Bitfunder in 2012 and at least July 2013.

In July 2013, according to prosecutors, Montroll solicited investments in a security he called Ukyo.Loan, promising investors that they would earn interest daily and could redeem their shares at any time.

In the same year, computer hackers succeeded in withdrawing about 6,000 bitcoins from WeExchange that they had not earned, leaving Montroll unable to pay what he owed Ukyo.Loan investors and users of WeExchange and BitFunder.

Nonetheless, Montroll did not disclose the hack and continued to solicit investments, the report said, citing a statement from the prosecutors.

Montroll subsequently came under investigation by the US Securities and Exchange Commission, and lied to investigators in sworn interviews in 2013 and 2015 about when he learned of the hack and about other matters, according to the report.

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RC

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