Home > Reading Room > Bitcoin exchange admin arrested by the FBI

Bitcoin exchange admin arrested by the FBI

Written by Samuel O'Toole on 23 February 2018

« Return to Reading Room

Mr. Jon E. Montroll was recently arrested by the FBI for allegedly providing a false testimony and documents to the Securities Exchange Commission (SEC). Montroll was the operator of two Bitcoin services: Weexchange, a bitcoin deposit and exchange service and Bitfunder, a service that allowed for the trading of shares.

In 2013 6,000 bitcoins were stolen, by hackers, from the Weexchange platform. This theft resulted in Weexchange and Bitfunder with less bitcoins than was owed to its clients. During the investigations, it is alleged, that Montroll did not tell the whole truth in regards to the hack. 

U.S. Attorney Geoffrey S. Berman, explained that: “SEC investigations rely on learning the full and accurate facts concerning financial markets and products. As alleged, the defendant repeatedly lied during sworn testimony and misled SEC staff to avoid taking personal responsibility for the loss of thousands of his customers’ bitcoins. These charges signify that we will use the full force of the federal criminal law to protect the integrity of the SEC’s investigative process.”

On the other hand, Montroll explained, in a 2013 testimony, there had not been a successful hack and subsequent theft. “the system stopped them because the amount was obviously causing issues with the system.”

It is reported that Montroll provided a screenshot to the SEC that showed the funds available to the Bitfunder clients, a sum of 6,679.78 bitcoins.  Although the investigators claim that this screenshot was a fabrication. Montroll then went on to attempt to conceal the loss with his own bitcoin funds, but this was not successful.

Director in Charge, William F. Sweeny Jr., stated: “As alleged, Montroll committed a serious crime when he lied to the SEC during sworn testimony. In an attempt to cover up the results of a hack that exploited weaknesses in the programming code of his company, he allegedly went to great lengths to prove the balance of bitcoins available to Bitfunder users in the Weexchange Wallet was sufficient to cover the money owed to investors. It’s said that honesty is always the best policy – this is yet another case in which this virtue holds true.”

If you'd like to know more about this article please send an email to Michael Coyle quoting the article title and any questions you might have, alternatively call the office number on 02380 235 979 or send an enquiry through our contact form.

Want to speak
to someone?

Complete the form below and we’ll call you back free of charge.

Visual Captcha