Jon Montroll, the operator of BitFunder was recently ordered by a New York court to pay over $150k in restitution to the victims of his fraudulent securities scheme.
The court determines the restitution amount
Earlier today, New York Southern District Court’s Judge Richard M. Berman ordered Montroll to pay restitution of $155,572 to the victims of his fraudulent securities scheme. Montroll operated Bitfunder.com and WeExchange which made several customers lose money. He was sentenced to 14 months in prison earlier this year. However, the court did not decide the amount of restitution he must pay at the time.
In a plea agreement, the parties presented an amount of $167,438 for restitution of the victims, but the court decided a smaller, albeit a closer amount. Montroll had argued for a smaller sum than what was asked for by the parties. According to the amended judgment by the court, he will spend 14 months in jail followed by 3 years of supervised release.
He will also have to pay the restitution amount decided by the court. The court recommended Montroll to be placed in either FCI Camp Facility of Texarkana or the FCI Camp Facility Bastrop, both in Texas. The Bureau of Prisons will decide the place where he serves his prison sentence, and Montroll will have to surrender himself before 2 pm on November 29 to the authorities.
A securities fraud that shocked hundreds
Montroll pleads guilty to obstruction of justice and securities fraud. He tried to defraud investors using virtual security called Ukyo. Loan. He later announced a hack into his business and continued to lie to the Securities and Exchange Commission (SEC) when the agency investigated the hack.
Montroll was running a Bitcoin-related business much before the cryptocurrency went mainstream. In December 2012, he was operating WeExchange, a currency exchange service and Bitcoin depository platform. He also went on to launch Bitfunder.com which operated as a trading platform for virtual shares. BitFunder users had to create a WeExchange account as well because it provided a digital wallet service called WeExchange Wallet.
In July 2013, it was reported that hackers tried to infiltrate the platform. Montroll discovered the hack but tried to cover it up by transferring a large number of Bitcoins into WeExchange. This filled the losses for the users who were never informed about an exploit. Investigations by the SEC later revealed that the platform had an exploit and Montroll was charged in February 2018.