BitFunder and WeExchange CEO, Jon Montroll, Sentenced to 14 Months for Fraud and Obstruction of Justice

Jon Montroll, operator of two online crypto investment schemes, WeExchange Australia and BitFunder, has been sentenced to 14 months in prison for fraud and obstruction of justice.

Montroll, 38, of Saginaw, Texas, has also been ordered to pay restitution of $167, 480 USD and will serve an additional three years’ probation.

According to a release from the U.S. Attorney’s Office, Southern District of New York, WeExchange was, “a Bitcoin depository and currency exchange.”

Bitfunder, created in 2012, “facilitated the purchase and trading of virtual shares of business entities that listed their virtual shares on the BitFunder platform.”

Montroll also later created a service called Ukyo.Loan, and allegedly, “encouraged investors to ‘think of (Ukyo.Loan) as a sort of round-about investment,’ in BitFunder and WeExchange… (as well as ) a personal loan (service)…for private investment purposes.”

Montroll also allegedly promised purchasers of Ukyo.Loan products that they would receive daily interest on invested monies and could, “redeem…at face value anytime upon request.”

Montroll’s programs appear to have attracted the interest of regulators following a summer 2013 hack on the Bitfunder platform in which cyber thieves made of with approximately 6000 bitcoins.

Hackers reportedly pulled off the theft by, “exploit(ing) a weakness in the BitFunder programming code to cause BitFunder to credit…Hackers(‘ accounts) with profits they did not…earn.”

“As a result of the Exploit, BitFunder and WeExchange lacked the bitcoins necessary to cover what Montroll owed to users,” the US Attorney’s Office writes.

Montroll, the State of New York claims, then failed to disclose the hack to investors and instead, “continued to promote and sell Ukyo.Loan to customers and, on at least one occasion, falsely represented to customers that BitFunder was commercially successful.”

He then went on to raise approximately 978 bitcoins through Ukyo.Loan in the wake of the hack.

An investigation by the SEC into Bitfunder and the hack ensued, during which Montroll, “…provided the SEC with a falsified screenshot purportedly documenting, among other things, the total number of Bitcoins available to BitFunder users in the WeExchange Wallet as of October 13, 2013.”

Authorities also claim Montroll lied in court on November 14, 2013, and on October 6, 2015, when he, “…provided materially false and misleading answers to certain questions about, among other things, the timing of Montroll’s discovery of the Exploit.”

Judge Geoffrey S. Berman, “praised the outstanding work of the Federal Bureau of Investigation,” during the trial and also gave credit to the SEC, which has filed its own set of civil charges against Montroll.

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