US Government Arrests The Owner of BitFunder

According to U.S. Attorney's Office Southern District of New York a founder of BitFunder, a bitcoin-denominated stock exchange was arrested
22 February 2018   228

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 As a result, roughly 6,000 BTC were withdrawn from WeExchange.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.

Japanese Watchdog to Warn Binance

Let's check the impact of these news to the Bitcoin price
22 March 2018   89

The Financial Services Agency of Japan (FSA) warned the Binance exchange for the need to obtain a license to continue working in the country. This is reported by Nikkei.

According to the regulator, the work of Binance in Japan without a license from the Financial Services Agency violates the local law on payment services and thereby jeopardizes the interests of investors. In addition, if the crypto-exchange does not suspend activities in Japan, a criminal case will be brought against it.

Binance is one of the world's largest cryptocurrency exchanges, while Japan also holds a leading position in the development of the bitcoin industry. Thus, it is not surprising that immediately after the spread of this news, the price of the first cryptocurrency went down.

Bitcoin Price Chart
Bitcoin Price Chart

As you can see on the chart above, BTC price fell down from $9030 to $8726 in 1.5h. At the moment of press, these are main bitcoin market parameters:

  • Average price: $8 775,51
  • Market cap: $148 597 132 463
  • 24h volume: $5 822 390 000