There is an update on the US authorities’ action against Jon E. Montroll and Bitfunder, accused of operating an unregistered securities exchange and defrauding users of that exchange.
On July 18, 2018, counsel for Montroll and Bitfunder submitted a status report with the New York Southern District Court. The document, seen by FinanceFeeds, states that “the defendants’ efforts to resolve the criminal case related to this proceeding, United States v. Montroll, 18 Mag. 1372, have culminated in a plea agreement agreed upon in principle and expected to be finalized and entered by July 23”. Put otherwise, the plea is expected early next week.
As a result of the anticipated plea in the criminal case, negotiations with the Securities and Exchange Commission (SEC) to resolve the civil case have accelerated, the counsel for the defendants says. Montroll and Bitfunder currently expect to resolve the civil case by agreement as well. The parties expect it will take 2-3 months to achieve a final resolution by agreement.
Let’s recall that in February this year, the SEC charged Bitfunder, a former Bitcoin-denominated platform, and its founder – Jon Montroll, with 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.
In its complaint, the SEC alleges that BitFunder was an unregistered online securities exchange and that Montroll defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on BitFunder’s system that resulted in the theft of more than 6,000 bitcoins.The SEC also alleges that Montroll sold unregistered securities that purported to be investments in the exchange and misappropriated funds from that investment as well.
The SEC’s complaint charges BitFunder and Montroll with violations of the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctions and disgorgement plus interest and penalties.
In a parallel criminal case, the U.S. Attorney’s Office for the Southern District of New York filed a complaint against Montroll for perjury and obstruction of justice during the SEC’s investigation.
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