Crypto

BitFunder founder Jon Montroll faces raps for fraud

With the recent bitcoin theft controversy involving Jon Montroll, the U.S. SEC is knocking on the doors of every name in the crypto market.

Published

6 years ago

March 5, 2018

Suzanne Mitchell

The U.S. Securities and Exchange Commission (SEC) has begun a series of investigations and crackdown against alleged frauds in the crypto industry. One of the prominent individuals recently indicted for suspected fraudulent acts is Jon Montroll. Sufficient evidence has been found indicating that his company is responsible for bitcoin theft.

Montroll is the founder of the defunct BitFunder, a platform for cryptocurrency transactions and trade. Crowdfund Insider reported that the charges are part of the recent crackdown of the SEC on cryptocurrency-related frauds. The charges against Montroll are just part of the larger investigation being conducted by the regulator about the market as a whole.

Just a few weeks ago, the SEC started its investigation of the crypto market related to initial coin offerings or ICOs, per USA Herald. It also issued several subpoenas and requests for information from various companies engaged in the said market.

Montroll is charged with illegally operating an unregistered securities and exchange and defrauding the users of the crypto exchange platform. According to the charges, Montroll has misled the users by issuing false statements. BitFunder was closed down in 2013 after more than a year of operations.

Bitcoin theft

According to the SEC, Montroll and his company purposely withheld vital information on the cyber attack on the platform and also misappropriated the bitcoins of the users. Users lost over 6,000 bitcoins, which by today’s value is estimated to be at least $61,800,000, according to NewsBTC.

SEC New York Regional Office associate regional director Lara Mehraban assured the investors and the general public that the commission will “vigorously police” the transactions involving crypto money. Mehraban also said that the guilty parties will be held accountable.

If Jon Montroll’s proven guilty, he is looking at a 10-year sentence in prison. (Source)

Under SEC regulations, platforms functioning as national securities exchange must be registered even if they are involved in cryptocurrency trade and investment. If proven guilty, Montroll can be incarcerated for 10 years, per Cryptona.

Montroll’s legal troubles do not end with the SEC fraud charges. The U.S. Attorney’s Office for the Southern District of New York also filed parallel criminal charges of perjury and obstruction of justice against the BitFunder founder.

Regulatory enforcement

Concerning the subpoenas and information requests filed by the SEC, one lawyer described the requests to be very difficult to answer for any normal individual. However, those who received the subpoenas are also given the option to simply meet with the investigators instead of submitting voluminous documents.

Multiple regulatory agencies in various parts of the world have been closely examining the crypto market in the past few months. The investigations are triggered by the increasing incidences of cryptocurrency theft and scams.

According to The Verge, SEC Chairman Jay Clayton has issued warnings to ICO investors, informing them that no ICOs have been registered at the time. He also released a due diligence checklist of requirements for investors and ICOs. The regulator will strictly monitor ICOs and ensure compliance with federal regulations on trading securities. Clayton said that any company that promotes ICOs and sale of securities must follow the regulations.

Suzanne Mitchell

Suzanne Mitchell juggles the busy life of a full-time mom and entrepreneur while also being a writer-at-large for several business publications. Her work mostly covers the financial sector, including traditional and alternative investing. She shares reports and analyses on the real estate, fintech and cryptocurrency markets. She also likes to write about the health and biotech industry, in particular its intersection with clean water and cannabis. It is one of her goals to always share things of interest to women who want to make their mark in the world.