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John Montroll, BitFunder Founder, Pleads Guilty to Fraud Charges

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Breaking news today (Monday 24th July) as BitFunder’s founder John Montrell has pleaded guilty to charges of obstruction of justice and fraud. The charges relate to a cover-up orchestrated by Montrell, following the theft of 6,000 Bitcoins from a second business of his – WeExchange, back in 2013; and his ongoing defrauding of investors on BitFund, from which he allegedly withdrew customer Bitcoins for personal use. As the possibility of a guilty plea drew closer last week, William F. Sweeney Jr., FBI assistant director-in-charge, told the media:

As alleged, Montroll committed a serious crime when he lied to the SEC during sworn testimony. In an attempt to cover up the results of a hack that exploited weaknesses in the programming code of his company, he allegedly went to great lengths to prove the balance of Bitcoins available to BitFunder users in the WeExchange Wallet was sufficient to cover the money owed to investors.

Analysis

BitFunder closed down at the end of 2013 and Bitcoins were returned to users of the platform. But this was not before Montroll had allegedly withdrawn large amounts of users’ investments, which he then spent on personal investments. After a massive hack – worth just under $1 million when it occurred, but now worth in excess of $40 million – Montroll was left with no money to pay what he owed to clients of BitFunder, WeExchange or a third business that he owned – Ukyo.Loan. However, it is believed that he continued to solicit investments, covering up the hack and lying about it to the SEC on his balance statements.

Daniel Levy, Montroll’s lawyer, could not be reached for comment at this time.

Image Credit: Deposit Photos

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