US Government Arrests Bitcoin Stock Exchange Founder


Jon “Ukyo” Montroll, owner of now-defunct bitcoin-denominated stock exchange company Bitfunder, was arrested last week, according to the US Attorney’s Office Southern District of New York.

According to the Justice Department, the arrest was made following a collaborative investigation with the Federal Bureau of Investigation (FBI) as well as the Securities and Exchange Commission (SEC). This, on top of a separate action for civil charges to be pursued by the SEC for the company’s supposed operations of unlicensed securities exchange, as well as defrauding investors.

Montroll’s arrest is related to the hacking case back in 2013, when Bitfunder was hacked resulting to a withdrawal of as much as 6,000 bitcoins from We Exchange, effectively rendering the company’s services insolvent. While Bitfunder was cooperative at that time, even cooperating in the investigation by giving testimonies, it turns out that the balance they submitted, which reflected an amount of 6,700 BTC, was in fact “a misleading fabrication.”

“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.”

They furthered that “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.”


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