Bitcoin Platform Operator Pleads Guilty to Lying About Hack
The operator of two defunct cryptocurrency services pleaded guilty to charges that he stole his customers’ deposits and lied to investigators after hackers stole thousands of bitcoins from the services.
Jon E. Montroll, 37, of Saginaw, Texas, faces as long as 20 years in prison for securities fraud and obstruction of justice after entering his plea before U.S. Magistrate Judge James L. Cott in New York Monday. Montroll operated two online services -- WeExchange, which served as a bitcoin depository and currency exchange service, and BitFunder, which enabled the purchase and trading of virtual shares of business entities that listed on the platform.
Prosecutors said Montroll converted a portion of bitcoins belonging to WeExchange customers into U.S. dollars and spent them on travel and groceries, among other personal expenses. Then , during the summer of 2013, hackers exploited a weakness in BitFunder’s programming code to steal about 6,000 Bitcoins -- leaving Montroll without enough to cover what he owed to users.
