Jon Montroll, also known as “Ukyo” – former operated of two crypto businesses WeExchange and Bitfiunder, pled guilty to securities fraud and obstruction of justice charges leveled against Montroll in New York Federal Court in New York this week. Montroll launched Bitfunder in 2012 where he promoted the ability to buy Bitcoin low and sell high.
Montroll, 37, of Saginaw, Texas, pled guilty to one count of securities fraud and one count of obstruction of justice. The charges each carries a maximum penalty of 20 years in prison.
Manhattan U.S. Attorney Geoffrey S. Berman said that Montroll deceived investors and then he attempted to deceive the Securities and Exchange Commission (SEC).
“He repeatedly lied during sworn testimony and misled SEC staff to avoid taking responsibility for the loss of thousands of his customers’ Bitcoins,” said Berman.
WeExchange functioned as a Bitcoin depository and currency exchange service. BitFunder facilitated the purchase and trading of virtual shares of business entities that apparently listed their virtual shares on the BitFunder platform.
The court explained that between the launch of Bitfunder and at least until July 2013, Montroll converted a portion of WeExchange users’ bitcoins to his personal use. Montroll was said to have used Bitcoin to fund things such as travel and trips to the grocery store.
Around the same time, Bitfunder was hacked. Not only did hackers credit themselves with profits they had not earned but they were able to successfully withdraw around 6000 BTC. This put both BitFunder and WeExchange in a bit of a bind.
Montroll reacted by covering up the hack. He was able to raise another 978 BTC following the exploit.
During the course of the investigation, Montroll provided the SEC with a bogus screenshot purportedly documenting, among other things, the total number of Bitcoins available to BitFunder users in the WeExchange Wallet as of October 13, 2013.
Montroll’s sentencing will take place at a later date.