SEC, BitFunder operator mark further progress in settlement discussions

Maria Nikolova

The US regulator and Jon Montroll continue to expect to resolve the civil case by agreement.

The United States Securities and Exchange Commission (SEC) and Jon Montroll, the person behind now-defunct Bitcoin platform BitFunder, continue to progress with settlement negotiations in a civil case brought by the US regulator. This becomes clear from a status report submitted to the New York Southern District Court on Thursday, September 20th.

The document says that the parties continue to expect to resolve the civil case by agreement, subject to approval by the Commission. This was already indicated in a report filed in August.

The defendants are set to submit a further status report on or about October 19. If the parties do not believe, at that time, that the case will be resolved by agreement, then they will so indicate.

Let’s recall that 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.

In July this year, a plea agreement in the criminal case related to this proceeding was entered. Montroll, a/k/a “Ukyo,” pled guilty to securities fraud and obstruction of justice. Each of these charges carries a maximum penalty of 20 years, with Montroll to be sentenced by Judge Berman at a date to be determined.

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