NY Court postpones sentencing of BitFunder operator Jon Montroll

Maria Nikolova

Judge Richard M. Berman of the New York Southern District Court has adjourned the sentencing to January 24, 2019.

Jon Montroll, operator of purported Bitcoin platform BitFunder, has obtained the Court’s approval of his request to have his sentencing postponed again.

The latest document filings with the New York Southern District Court show Judge Richard M. Berman has granted the defendant’s request. This means that sentencing is adjourned to January 24, 2019.

Montroll has asked for additional time to generate funds that are set to allow him to make a substantial payment towards his agreed-upon restitution obligation prior to sentencing. The defense counsel has explained that Montroll owns and operates two nursing homes in north Texas and expects to receive in December and January reimbursement for services rendered that will allow him to satisfy part of his restitution in advance of sentencing.

Montroll, a/k/a “Ukyo,” operated two online bitcoin services: WeExchange Australia, Pty. Ltd. (WeExchange) and BitFunder.com (BitFunder). WeExchange functioned as a bitcoin depository and currency exchange service. BitFunder facilitated the purchase and trading of virtual shares of business entities that listed their virtual shares on the BitFunder platform.

Between the launch of Bitfunder, in or about December 2012, and at least in or about July 2013, Montroll converted a portion of WeExchange users’ bitcoins to his personal use without the users’ knowledge or consent. He exchanged bitcoins taken from WeExchange into US dollars, then spent those funds on personal expenses, such as travel.

In addition, since July 18, 2013, Montroll has promoted a security referred to as “Ukyo.Loan.” He encouraged investors to “think of [Ukyo.Loan] as a sort of round-about investment” in BitFunder and WeExchange and, at the same time, described Ukyo.Loan as “a personal loan” and “for private investment purposes.”

During the summer of 2013, one or more individuals (the so-called “Hackers”) exploited a weakness in the BitFunder programming code to cause BitFunder to credit the Hackers with profits they did not, in fact, earn. As a result, the Hackers were able to wrongfully withdraw from WeExchange approximately 6,000 bitcoins, with the majority of those coins being wrongfully withdrawn between July 28, 2013, and July 31, 2013. Due to this “exploit”, BitFunder and WeExchange lacked the bitcoins necessary to cover what Montroll owed to users.

Montroll did not disclose what happened to users of BitFunder and WeExchange, or investors in Ukyo.Loan. Instead, he continued to promote and sell Ukyo.Loan to customers and, on at least one occasion, falsely represented to customers that BitFunder was commercially successful. As a result of his omissions and misrepresentations, the defendant raised approximately 978 bitcoins through Ukyo.Loan after his discovery of the Hackers’ actions.

In July this year, Montroll pleaded guilty to securities fraud and obstruction of justice.

The case is captioned USA v. Montroll (1:18-cr-00520).

Read this next

Digital Assets

DappRadar report: NFTs volume below $1 billion for the first time since June 2021

DappRadar’s July 2022 industry report found that blockchain games and their NFTs remain resilient amid a crypto winter accentuated by the debacle of Terra.

Digital Assets

Blockchain.com registers to operate crypto business in Italy

Blockchain.com had registered as a digital asset provider in Italy, following in the tracks of rivals who joined a special registry with brokerage regulator Organismo degli Agenti e dei Mediatori (OAM).

Digital Assets

Binance rolls out crypto card in Argentina with 8% cashback

Binance is launching its crypto debit card in Argentina, the first country in Latin America to have the product thanks to a partnership with Mastercard.

Digital Assets

Greece sends BTC-e operator Alexander Vinnik to US

Alexander Vinnik, an alleged Russian hacker accused of laundering $4 billion of criminal proceeds through BTC-e, has been extradited from Greece to the United States.

Retail FX

Saxo Bank reports weakest FX volume in 6 months

As many traders were away on annual summer leave, currency markets saw a relatively quiet period in July. Within that context, Copenhagen-based Saxo Bank has reported its monthly metrics, which showed a renewed decline month-over-month.

Market News

The Week Ahead: 5 August from David Madden, Market Analyst at Equiti Group

It has been an interesting week and despite a lot of negative news, equity markets enjoyed a positive run. US House Speaker, Nancy Pelosi, defied the warnings from the Chinese government and carried out a visit to Taiwan. The Beijing authorities moved military hardware close to the self-governed island to flex its muscles. Stock markets came under a little pressure as a result and risk-off assets like the Japanese yen and gold found themselves in high demand.

Opinion

Alina Strogonova of Muvon Payments: How Can Fintech Optimise Payments

Financial services in their conventional form are obsolete, according to fintech startups. New-age finance is constantly redesigning electronic money transactions and testing innovative solutions.

Digital Assets

No need for CFDs: BitMEX introduces leveraged FX perpetual swaps

Previously retail FX trading was mostly possible via CFDs (contract for difference). BitMEX’s FX perps allow both retail users and institutional traders to access FX markets through an exchange-traded contract.

Digital Assets

BEQUANT launches index measuring dollar against crypto

“Our research team has worked hard to quantify and capture the latest economic story into the broader crypto market.”

<