Today, the U.S. Justice Department following an investigation that involved the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) unveiled the charges against Jon Montroll.
According to the SEC press release, the commission is pursuing civil charges against Montroll in a separate action, alleging that he operated an unlicensed securities exchange and defrauded investors.
The case goes back to an earlier period in bitcoin's history when websites like BitFunder were more common. BitFunder was shuttered in late 2013 and acted as a service to cryptocurrency exchange WeExchange.
According to the Department of Justice's complaint, BitFunder was the target of a hacking effort that enabled those behind the attack to credit themselves funds. As a result, roughly 6,000 BTC were withdrawn from WeExchange.
According to the agency, it alleges Montroll operated BitFunder as an unregistered online securities exchange and defrauded exchange users by misappropriating their Bitcoin, and also for failing to disclose a cyber attack on BitFunder’s system that resulted in the theft of roughly 6,000 BTC.
Contemporaneous digital evidence, including chat logs and transaction data, revealed that the Balance Statement was a misleading fabrication. Three days into the Exploit, Montroll had participated in an internet relay chat with another person in which he sought help in tracking down "stolen coins." When that did not work, Montroll transferred some of his own bitcoin holdings into WeExchange to conceal the losses. The Exploit, however, continued. By the time of the Balance Statement, WeExchange actually held thousands of bitcoins less than Montroll had asserted through the false Balance Statement.
The Justice Department
According to the statements, Montroll is accused of further misleading SEC staff after being confronted by SEC investigators.