Jon E. Montroll from Saginaw, Texas is facing up to 20 years in prison for stealing thousands of Bitcoins from customer funds, running an unregistered securities exchange, and lying to US security regulators after his cryptocurrency exchange, BitFunder, was hacked, says Bloomberg news. Montroll pleaded guilty to securities fraud and obstruction of justice before US Magistrate Judge James L Cott on July 21, 2018, and now faces up to 20 years in prison. Montroll, 37, operated two defunct cryptocurrency services. One of the services was WeExchange Australia Pty Ltd, a cryptocurrency exchange and Bitcoin depository. BitFunder was a service whichaided the sale of virtual shares from business entities in exchange for cryptocurrencies like Bitcoin.
The SEC says that Montroll also did not register his securities exchange. “Platforms that engage in the activity of a National securities exchange, regardless of whether that activity involves digital assets, tokens, or coins, must register with the SEC or operate pursuant to an exemption,” said Marc Berger, the director of the SEC’s New York Regional Office.
Montroll defrauded investors by taking the Bitcoin deposits from WeExchange users’ and spending it on himself. Instead of providing the services required, he exchanged the cryptocurrencies for fiat currency and spent the money on personal expenses like travel and groceries.