SEC awaits conclusion of criminal proceeding against BitFunder operator Jon Montroll

Maria Nikolova

The Commission’s staff is awaiting conclusion of the criminal proceeding against Montroll before finalizing its recommendation.

The action brought by the Securities and Exchange Commission (SEC) against Jon Montroll, the operator of Bitcoin-related services WeExchange and Bitfunder.com, continues at the New York Southern District Court, with a Status Report submitted with the Court earlier today.

The document, seen by FinanceFeeds, says that the parties have agreed on proposed settlement terms subject to the submission by Montroll of financial statements and approval of the settlement by the SEC. Montroll has submitted the statements.

That the SEC and Montroll agreed on proposed settlement terms was first announced in October 2018. Then Montroll had to file certain financial statements and gain the approval of the settlement by the Commission. The Commission’s staff’s review of the submission has been ongoing for months.

The latest Status Report says the Commission’s staff is awaiting conclusion of the criminal proceeding against Montroll before finalizing its recommendation to the Commission.

In February 2018, the SEC charged Bitfunder, a former Bitcoin-denominated platform, and its founder – Jon Montroll, with operating an unregistered securities exchange and defrauding users of that exchange. The SEC also charged the operator with making false and misleading statements in connection with an unregistered offering of securities.

In its complaint, the SEC alleges that BitFunder was an unregistered online securities exchange and that Montroll defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on BitFunder’s system that resulted in the theft of more than 6,000 bitcoins.The SEC also alleges that Montroll sold unregistered securities that purported to be investments in the exchange and misappropriated funds from that investment as well.

The SEC’s complaint charges BitFunder and Montroll with violations of the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctions and disgorgement plus interest and penalties.

In a related criminal case against Montroll, the US Government is pushing for a sentence within the range of 27 to 33 months’ imprisonment for the defendant. According to the Government, an imprisonment sentence from 27 to 33 months is necessary, first and foremost, to promote respect for the law. Second, such a sentence is seen as necessary for general deterrence.

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