Home » Featured » Bitcoin Platform Operator Pleads Guilty to Stealing Clients’ Funds.
Click Here To Hide Tor

Bitcoin Platform Operator Pleads Guilty to Stealing Clients’ Funds.

On July 24, United States attorney Geoffrey S. Berman announced that an operator for currently defunct bitcoin platforms pleaded guilty to securities fraud and obstruction of justice. The operator is guilty of using clients’ funds for his own expenses and lying about details of a hack on his platform that resulted in the loss of 6,000 bitcoins.

Jon E. Montroll, 37-years-old, operated two online services WeExchange Australia and Bitfunder.com. WeExchange was used as a depository for bitcoin and a currency exchange platform while Bitfunder was used as a trading platform that enabled clients to trade in virtual shares of businesses listed in the platform. Bitfunder users had to have a WeExchange account that served as a wallet for bitcoins used to carry out trades.

Montroll was arrested on February 21 by Federal Bureau of Investigations (FBI) agents for giving false information and documentation to the Securities Exchange Commission (SEC). The arrest came after the SEC opened an investigation into the activities and hack of Bitfunder. After the arrest, Montroll was charged with two counts of perjury and one of obstruction of justice.

WeExchange operated from Australia and allowed users from all over the world to withdraw, or deposit digital and fiat funds. WeExchange had a common wallet for all funds and Montroll maintained absolute control over the wallet meaning he could transfer bitcoins as he desired. In the period between July 2012 and December 2013, Montroll converted the client’s bitcoins into U.S. dollars without their consent and knowledge. After making the conversion, he used the money to fund his own expenses.

In the period between July and August 2013 hackers exploited a weakness in Bitfunder’s programming code and stole approximately 6,000 bitcoins. After the hack, Montroll was left with insufficient funds and would as a result not be able to pay what he owed WeExchange and Bitfunder clients. Montroll did not reveal the hack to users of his platforms and continued to market Bitfunder as a prosperous and stable venture. Montroll was able to raise 978 more bitcoins after the hack.

In November 2013 Montroll gave a sworn testimony to SEC agents who were investigating the hack and Bitfunder activities. In the testimony, Montroll said the hack was unsuccessful and that no funds were stolen as he was able to fix the weakness exploited by the hackers within hours. To support his testimony Montroll gave a screenshot of what was supposed to be the balance of bitcoins belonging to Bitfunder users in the WeExchange wallet in October 2013. The wallet had thousands lesser than what Montroll made the SEC believe.

To cover-up evidence of the stolen funds, Montroll attempted to contact an expert who would help trace the stolen coins. When attempts of tracing the stolen coins failed he deposited his coins into the WeExchange wallet. His bitcoins were, however, insufficient to cover the stolen funds. SEC investigations uncovered these activities and presented them to Montroll in subsequent questions.

Montroll claimed that he did not know that the hack was a success until after the first testimony. He also denied having contacted an expert to help track the stolen coins. Montroll’s Failure to disclose details of the hack made it possible for him to run the platform while collecting funds from users through the WeExchange wallet.

In pleading guilty to one count of Securities fraud and one count of obstruction of juice, Montroll may spend up to 20 years in prison since each of the charges has a maximum of 20 years imprisonment.

2 comments

  1. Good. People like him are what prisons SHOULD be used for. NOT nonviolent drug users. We never solved mental illness by caging patients why now? Policing for profit is turning USA into a police state economy.

  2. he didn’t know if he was hacked I think I know who stole the coins 2 slavery is what turned it into a police state economy

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Captcha: *