SEC and BitFunder operator Jon Montroll agree on settlement

Maria Nikolova

The parties have agreed on proposed settlement terms subject to the completion by Montroll of sworn financial statements and approval of the settlement by the Commission.

The civil action brought by the United States Securities and Exchange Commission (SEC) against Jon Montroll, the operator of now-defunct Bitcoin platform BitFunder, is getting closer to termination, as indicated by the latest Status Report submitted by the defendants’ counsel at the New York Southern District Court earlier today.

The report says that the parties have agreed on proposed settlement terms subject to the completion by Montroll of sworn financial statements and approval of the settlement by the Commission. The Commission’s staff intends to recommend that the Commission approve the settlement if it deems the financial statements satisfactory for the staff’s purposes. At this point, there are no details on what the settlement terms are.

Defendants will submit a further status report on or about November 16th.

If the parties do not believe, at that time, that the case will be resolved by agreement, then they will so indicate and the Court will be able to schedule the pre-trial conference it previously adjourned sine die, and associated deadlines.

In September this year, the parties had said they were marking progress in their settlement discussions in this civil case. Early in October, Judge Richard M. Berman of the New York Southern District Court postponed the sentencing of Montroll in a related criminal case, as the defendant said he needed more time to resolve the civil matters.

In February this year, 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.

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