CEO of BitFunder Exchange Gets 14 Months in Prison for Fraud, Obstruction

The operator of BitFunder and WeExchange will serve 14 months in prison after defrauding investors and misrepresenting a hack.

Jul 12, 2019 at 6:59 p.m. UTC
Updated Sep 13, 2021 at 9:25 a.m. UTC

Jon Montrol, the operator of defunct bitcoin-denominated trading platform BitFunder and WeExchange deposit service, was sentenced for securities fraud and obstruction of justice, according to a statement from the Southern District of New York.

Montrol, of Saginaw, Texas, also known as Ukyo, will serve 14 months in prison for defrauding investors of his “Ukyo.Loan” scheme, transferring funds without investor’s knowledge or consent, and lying to Federal Bureau of Investigation (FBI) and Securities Exchange Commission (SEC) agents during their investigation.

In July 2018, Montrol pleaded guilty for such activities. Manhattan U.S. Attorney Geoffrey S. Berman said:

“Jon Montroll lied to his investors and, after his lies caught the attention of the SEC, lied to them, too. The sentence he received serves as a reminder that this Office will not overlook those who violate their obligation to be honest with investors and the regulators working to protect them.”

In July 2013, BitFunder’s software was said to be hacked, enabling the theft of 6,000 bitcoin from Montrol’s companion fiat-to-crypto platform, WeExchange.

Per the DOJ's statement, Montrol allegedly failed to communicate the lost monies with investors or regulatory authorities. On one occasion, he promoted the operation as “commercially successful” instead of insolvent. Montrol repeated similar claims to the FBI and “provided the SEC with a falsified screenshot” of investor’s holdings as they began to investigate the exploit.

Montrol’s deception continued on the stand where he provided “materially false and misleading answers” regarding his businesses and the hack.

Additionally, during the investigation it was found Montrol used WeExchange as a personal bank. The attorney’s office wrote at the time:

“Montrol exchanged numerous bitcoins taken from WeExchange into United States dollars, then spent those funds on personal expenses, such as travel and groceries.”

Similarly, shortly before BitFunder shuttered, Montrol began offering a new product, Ukyo.Loan, described as a “round-about investment.” Attorneys also noted that Montrol referred to the investments as “a personal loan.”

Despite his businesses’ insolvency, Montrol continued to advertise Ukyo.Loans netting him 978 bitcoin.

Montrol was also ordered to three years of supervised release and to pay a $167,480 forfeiture.

Justice statue image via Shutterstock


Read more about
The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
How the US Can Establish Itself as a Crypto Leader

Regulators have an opportunity to map out thoughtful, strategic policy on stablecoins and beyond.

Regulators have an opportunity to map out thoughtful, strategic policy on stablecoins and beyond.

CoinDesk - Unknown
2
CoinDesk - Unknown
No, the UK Is Not Going to Make USDC and USDT Legal Tender

For “legalize” read “regulate.”

For “legalize” read “regulate.”

CoinDesk - Unknown
3
CoinDesk - Unknown
Thoughts From Davos

The crypto industry showed up in force at the World Economic Forum’s annual meeting.

The crypto industry showed up in force at the World Economic Forum’s annual meeting.

CoinDesk - Unknown
4
CoinDesk - Unknown
Bitso, primer unicornio cripto de América Latina, despide a 80 empleados

El exchange, que tenía más de 700 empleados antes de los recortes, cuenta con cuatro millones de usuarios en la región.

El exchange, que tenía más de 700 empleados antes de los recortes, cuenta con cuatro millones de usuarios en la región.

CoinDesk - Unknown