CEO of BitFunder Exchange Gets 14 Months in Prison for Fraud, Obstruction

Jon Montrol, the operator of defunct bitcoin-denominated trading platform BitFunder and WeExchange deposit service, was sentenced for securities fraud and obstruction of justice, according to a statement from the Southern District of New York.

Montrol, of Saginaw, Texas, also known as Ukyo, will serve 14 months in prison for defrauding investors of his "Ukyo.Loan" scheme, transferring funds without investor's knowledge or consent, and lying to Federal Bureau of Investigation and Securities Exchange Commission agents during their investigation.

In July 2018, Montrol pleaded guilty for such activities.

In July 2013, BitFunder's software was said to be hacked, enabling the theft of 6,000 bitcoin from Montrol's companion fiat-to-crypto platform, WeExchange.

Per the DOJ's statement, Montrol allegedly failed to communicate the lost monies with investors or regulatory authorities.

Montrol repeated similar claims to the FBI and "Provided the SEC with a falsified screenshot" of investor's holdings as they began to investigate the exploit.

During the investigation it was found Montrol used WeExchange as a personal bank.

"Montrol exchanged numerous bitcoins taken from WeExchange into United States dollars, then spent those funds on personal expenses, such as travel and groceries."

Shortly before BitFunder shuttered, Montrol began offering a new product, Ukyo.Loan, described as a "Round-about investment." Attorneys also noted that Montrol referred to the investments as "a personal loan."

Despite his businesses' insolvency, Montrol continued to advertise Ukyo.Loans netting him 978 bitcoin.