United States
United Kingdom
The US Securities and Exchange Commission charged BitFunder, a former Bitcoin-denominated investment platform, and its founder Jon Montroll for 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.
The SEC, in the case filed with the federal district court in Manhattan, has alleged that Jon Montroll operated BitFunder as an unregistered online securities exchange and defrauded exchange users by misappropriating their Bitcoins and failing to disclose a cyber attack on BitFunder’s system that resulted in the theft of more than 6,000 Bitcoins. Further, the SEC alleges that Montroll sold unregistered securities that purported to be investments in the exchange and misappropriated funds from that investment as well.
The SEC has charged BitFunder and Montroll with violations of the anti-fraud and registration provisions of the federal securities laws. Further, the SEC has also filed a complaint seeking permanent injunctions and disgorgement plus interest and penalties.
The SEC’s investigation was conducted by Daphna Waxman, Daphne Downes, and Valerie Szczepanik in the New York Regional Office. Ms.Waxman and Ms. Szczepanik also are members of the SEC’s Distributed Ledger Working Group and the Enforcement Division’s Cyber Unit. The litigation will be led by Dugan Bliss. The case is being supervised by Lara Mehraban.
In a parallel criminal case, the U.S. Attorney’s Office for the Southern District of New York today filed a complaint against Montroll for perjury and obstruction of justice during the SEC’s investigation.
Marc Berger, Director of the SEC’s New York Regional Office, said
“We allege that BitFunder operated unlawfully as an unregistered securities exchange. Platforms that engage in the activity of a national securities exchange, regardless of whether that activity involves digital assets, tokens, or coins, must register with the SEC or operate pursuant to an exemption. We will continue to focus on these types of platforms to protect investors and ensure compliance with the securities laws.”
Lara Mehraban, Associate Regional Director of the SEC’s New York Regional Office stated
“As alleged in the complaint, Montroll defrauded exchange users by misappropriating their Bitcoins and failing to disclose a cyberattack on the exchange’s system and the resulting Bitcoin theft. We will continue to vigorously police conduct involving distributed ledger technology and ensure that bad actors who commit fraud in this space are held accountable.”
