Bitcoin exchange founder arrested for allegedly lying to financial watchdogs

Thomson Reuters

FILE PHOTO - Representation of the Bitcoin virtual currency standing on the PC motherboard is seen in this illustration picture

• The founder of a crypto exchange was arrested for allegedly lying to US regulators, federal prosecutors say.
• In 2013, hackers stole 6,000 bitcoin from the platform founded by Jon Montroll and he allegedly tried to cover it up.

The founder of a defunct cryptocurrency exchange has been arrested for allegedly lying to financial watchdogs to cover up a heist of 6,000 bitcoin.

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Federal prosecutors in New York charged Jon Montroll, the 37-year-old founder of BitFunder, on Wednesday with obstruction of justice and two counts of perjury. Separately, the Securities and Exchange Commission has filed a lawsuit against the Texas resident for running a non-compliant exchange, according to a Bloomberg News report.

"As alleged, the defendant repeatedly lied during sworn testimony and misled SEC staff to avoid taking responsibility for the loss of thousands of his customers' bitcoin," Geoffrey Berman, Manhattan US Attorney, said.

In July 2013, hackers swiped what would now be worth $60 million of bitcoin from BitFunder, prosecutors said. The heist left the company without enough crypto to cover what users were owed. When questioned under oath by the SEC, Montroll denied the hacking was successful, saying that a technical issue had halted withdrawals. Montroll said those issues were fixed "immediately," according to prosecutors.

Exchanges heists have long plagued the cryptocurrency world, as noted by a wide-ranging noted on blockchain and bitcoin by JPMorgan.

"It is estimated that a third of bitcoin trading platforms have been hacked and these cyber theft/hackers took over $630 million in bitcoins," the bank said.

Take a look at some of the largest exchange hacks in the table below (courtesy of JPMorgan):

JPMorgan

Read the full report on Bloomberg>>

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