the US Government just arrested the bitfunder exchange owner

JON Montroll, the owner of BitFunder, a bitcoin-denominated stock exchange, has been arrested by the U.S. government.

charges against the exchange owner following investigation by the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) were unveiled today. The SEC is pursuing civil charges against Montroll in a separate action, they alledge that he operated an unlicensed securities exchange and defrauded investors.

Montroll was arrested Wednesday, according to the U.S. Attorney’s Office Southern District of New York.

The details of the cases date back to when websites like BitFunder, which was like a stock exchange for cryptocurrency companies, were common. BitFunder was abandoned in late 2013, and acted as a kind of companion service to cryptocurrency exchange WeExchange.

BitFunder was the target of a hacking effort that enabled those behind the attack to credit themselves funds. This resulted in the withdrawal of roughly 6,000 bitcoins from WeExchange, which left the services redundant.

Prosecutors allege that, in November 2013, Montroll “provided sworn testimony to the SEC’s New York Regional Office in connection with their investigation into the Exploit and BitFunder’s activities.”

The Justice department said on Wednesday: “Contemporaneous digital evidence, including chat logs and transaction data, revealed that the Balance Statement was a misleading fabrication. Three days into the Exploit, [Montroll] had participated in an internet relay chat with another person (“Person-1”) in which he sought help in tracking down “Stolen coins.” When that did not work, [Montroll] transferred some of his own bitcoin holdings into WeExchange to conceal the losses. The Exploit, however, continued. By the time of the Balance Statement, WeExchange actually held thousands of bitcoins less than [Montroll] had asserted through the false Balance Statement.”

Montroll is also being accused of further misleading SEC staff after being confronted by SEC investigators, according to statements taken:

“While [Montroll] admitted that the Balance Statement was the product of his manual intervention in the WeExchange system, he claimed to have discovered the success of the Exploit only after the SEC had asked him about it during his first day of testimony and to have no knowledge of the chat with Person-1,” the Department said.

Montroll has since been charged with two counts of perjury and one count of obstruction of justice. If the former exchange owner is convicted of his charges, he could face as long as 30 years in jail.

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