Jon E. Montroll, the founder and operator of one of the biggest cryptocurrency scams, BitFunder, plead guilty to the charges of securities fraud and obstruction of justice leveled against him by US Securities and Exchange Commission (SEC).
Charges Leveled Against Him
Nicknamed Ukyo, 37-year-old Montroll admitted to giving operatives of rhe SEC misleading statements to deceive them during the probe of a 6,000 bitcoin cyber-attack in 2013, which Montroll was the mastermind. The SEC also charged the platform and the founder for operating an unregistered exchange. Moreover, for operating outside the purview of US federal laws, Montroll’s securities exchange was unlawful. Also, the founder received accusations of defrauding investors using unregistered securities offerings.
More Details
The SEC accused the BitFunder operator of misappropriating investors’ Bitcoin. He also received accusations of not disclosing the purported cyber-incursion, which led to the loss of 6,000 bitcoins. So, for selling unregistered securities through the platform and misappropriating the funds, the SEC filed a law against him.
A Bit Of History
Montroll operated BitFunder, a platform that connects users to sell their virtual shares for virtual currencies. He also operated WeExchange Australia Pty Limited, a Bitcoin exchange and depository platform. From 2012 to 2013, discovery shows that Montroll converted the Bitcoin saved on WeExchange to fiat currency. From there, the defendant used the proceeds to go on a spending spree. In July 2013, he kept soliciting more investment for Ukyo.Loan, the name given to the security inspired by his screen name, Ukyo.
While soliciting people, he was promising to pay high returns on investments with an easy shares redemption procedure. After the unreported hack happened, Montroll couldn’t pay the investors the ROI he promised. Instead of disclosing that the platform was hacked, the alleged scammer never reported the cyber attacks but continued soliciting more investment. Montroll revealed during SEC investigations that it was because WeExchange was hacked, he couldn’t pay the investors he promised “anytime payment of returns.”
How Trouble Started
After a plethora of complaints lodged with the SEC, the watchdog swung into the action, filing charges against the exchange. The SEC, in collaboration with Department of Justice (DOJ), filed the charges, accusing the firm of running an unregistered securities platform and going ahead to defraud the users of the platform to the tune of 6,000 bitcoins or $720,000 at the time it happened.
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