It’s a new day, and it’s a new scam in the cryptocurrency world. Jon Montroll, the 37-year-old operator of BitFunder, also known as Ukyo, has pleaded guilty to U.S. federal charges of obstruction of justice. BitFunder, the now-defunct cryptocurrency stock exchange, based out of Texas, provided a virtual platform for users to trade their virtual shares of businesses in exchange for bitcoins (BTC). Montroll was also responsible for operating WeExchange Australia Pty Ltd, which served as a bitcoin depository and exchange service.
For a while now Montroll has been under investigation for claims of fraud but the breakthrough came only on Monday when he admitted to the charges against him. The prosecutors claim that Montrell admitted to having provided false balance statements to the U.S. Securities and Exchange Commission (SEC). This came to light during the investigation into fake 6,000 BTC BitFunder hack in 2013. He further confessed that he took bitcoins from users of WeExchange and sold them for fiat currency, which went towards his personal expenditure.
Montroll had also established some sort of security back in July 2013, called Ukyo.Loan under the garb of which, he solicited investments and promised regular interest in return, along with an easy redemption procedure. Unfortunately, when the 6,000 BTC hack took place, Montroll defaulted on his payments to both Ukyo.Loan investors and clients of both WeExchange and BitFunder. He, however, continued to get money out of them without alerting them of the hack.
Finally, the SEC and the Department of Justice (DOJ) filed official charges against Montroll in February. The accusations included operating an unregistered securities exchange, defrauding users of the same exchange and also lying to authorities in subsequent investigations about his knowledge regarding the hack. The 6,000 BTC that were lost to a hack is now worth $45 million in today’s market.
Scams like these are now the new norm in the crypto world. Recently the BTC-e crypto exchange operator, Alexander Vinnik, who is also known as “Mr. Bitcoin,” received an extradition judgment to France by a Greek court. Before this, U.S. authorities had indicted Vinnik on claims of fraud and money laundering charges in 2017, which amounted to $4 billion in Bitcoin.