BitFunder CEO Gets 14 Months Prison Time

A former cryptocurrency executive is heading to prison after a New York judge found him guilty of securities fraud and obstruction of justice.

Jon Montroll, who was the operator of WeExchange and BitFunder, will be imprisoned for 14 months. Following his release, he will be supervised by authorities for another three years.

The former cryptocurrency executive will also have to pay the US government a fine of just over $167,000.

Montroll's sentence relates to a series of incidents that took place in 2012, which seems like light years ago in the fast-moving world of cryptocurrency.

At the time, he ran two businesses. WeExchange allowed users to Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term online, and BitFunder enabled them to buy digital shares offered by other companies.

In 2013, it appears that hackers were able to break into the BitFunder backend and start stealing cryptocurrency from its users. When they were done, the cyber attackers had made off with 6,000 bitcoins - a sum that was at the time worth around $775,000.

Failing to fill the hole

Like many other cryptocurrency exchange owners, who seem to think that they can recoup massive client losses without anyone realizing, Montroll did not reveal what had happened to his clients.

Instead, he tried to return client funds using his own money. As always, this did not work, and a couple of months after the cyber attack, BitFunder users began to experience difficulties withdrawing funds from the site. Not long after that, Montroll shut the site down.

His obstruction of justice charge stemmed from what happened next.

When investigators from the Securities and Exchange Commission began looking at BitFunder, Montroll lied to them and said that he had managed to identify the hack early on. He claimed that, once he realized it was happening, he was able to stop it soon afterward.

Prosecutors were pushing for a harsher sentence but appear to have been unsuccessful in their efforts. Meanwhile, Montroll will be a free man until the end of October when he begins his prison time in Texas.