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Crypto Exchange Operator Lied About Hack

Fredrik Vold
Last updated: | 1 min read

The operator of the now-defunct US-based crypto trading services WeExchange and BitFunder has admitted that he is guilty of lying to customers about hacks on the two platforms, Bloomberg reported.

Source: iStock/luckyraccoon

The Texas man, identified as Jon E. Montroll, now faces charges of securities fraud and obstruction of justice, which may carry a sentence of up to 20 years in prison under federal laws.

WeExchange served as a bitcoin depository and exchange service, while BitFunder was set up to allow for trading in virtual shares of companies that were listed on the platform. Montroll is accused of having sold bitcoins belonging to customers for US dollars that he spent on personal expenses like groceries and travel.

Meanwhile, BitFunder became the victim of a security breach in the summer of 2013 where hackers managed to get away with about 6,000 bitcoins from the platform. The event left Montroll unable to pay back what he owed users on the WeExchange platform.

According to prosecutors, Montroll continued to promote BitFunder as a successful platform, raising another 978 bitcoins before the scheme collapsed. Montroll subsequently lied to the US Securities and Exchange Commission about the hack, denying that the intruders got away with any bitcoins.

Montroll was arrested in February this year.