Federal authorities arrested BitFunder owner Jon Montroll this Wednesday on charges of misleading the Securities and Exchange Commission (SEC) in relation to a cyber attack that led to the theft of 6,000 bitcoins. The SEC has separately charged Montroll with fraud.
Montroll, who hails from Texas, operated WeExchange Australia Pty Ltd., a bitcoin depository and exchange service, along with BitFunder.com, a cryptocurrency stock exchange. In 2013, hackers stole 6,000 bitcoins from WeExchange by exploiting a vulnerability in BitFunder’s programming code. The stolen bitcoins are worth around $70 million today.
Prosecutors said that Montroll had lied to the SEC that the hackers were unsuccessful and also provided false evidence regarding the availability of bitcoins to BitFunder users. Montroll also transferred his own bitcoins into WeExchange to cover up the losses.
Manhattan U.S. Attorney Geoffrey Berman stated that Montroll repeatedly lied in sworn testimony and misled SEC staff to avoid taking any responsibility for the loss of thousands of his customers’ bitcoins.
The stolen bitcoins are worth around $70 million today
The SEC alleged that the now-defunct BitFunder had operated as an unregistered online securities exchange. The agency also said that Montroll had deceived his users by misusing their bitcoins and also withholding information about the hack that involved the theft of over 6,000 bitcoins.
The Department of Justice is charging Montroll with two counts of perjury and one count of obstruction of justice which combined would entail a prison sentence of 30 years.