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BitFunder Charged With Fraud by US SEC

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A press release from the US Securities Exchange Commission has declared that it is indicting a now-defunct exchange on charges of fraud. BitFunder ceased its operations at the end of 2013 following the Bitcoin Stock Exchange shutdown two months earlier.

The New York Director said:

We allege that BitFunder operated unlawfully as an unregistered securities exchange. Platforms that engage in the activity of a national securities exchange, regardless of whether that activity involves digital assets, tokens, or coins, must register with the SEC or operate pursuant to an exemption.

This will no doubt drag up the old argument as to whether cryptocurrencies should be classed as tokens or securities. So far, it has been a gray area, with some companies seemingly getting away with ICOs while others don’t. However, the SEC also had this to say, relating to a second charge:

As alleged in the complaint, Montroll defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on the exchange’s system and the resulting bitcoin theft.  We will continue to vigorously police conduct involving distributed ledger technology and ensure that bad actors who commit fraud in this space are held accountable.

The second charge relates to a hacking incident in 2013, when 6,000 Bitcoins were stolen – this would now be worth over $60 million. At the time, the founder, Jon E. Montroll, is alleged to have provided a false balance statement, effectively denying that the theft ever took place.

This news comes after several ICOs were shut down at the end of 2017 and beginning of 2018. In December 2017, Munchee – an application for food reviews – were issued with a cease and desist order, and only last month, AriseBank were forced to wind up a $600 million ICO.

Image Credit: Deposit Photos

Should crypto be classed as securities? If not, then what? Let us know your thoughts.

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