Bitcoin Trader Pleads Guilty to Securities Fraud, Faces 20 Years in Prison

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Joe E. Montroll of Saginaw Texas is facing up to 20 years in prison after admitting to lying to investigators about his role in the theft of Bitcoins deposited by customers of his platform. 2018 has seen a raft of arrests and convictions in the cryptocurrency space as law enforcement, and financial regulators work hard to sanitize the industry.

Platform Owner Stole Bitcoin Belonging to Investors

Before his arrest, Montroll operated a pair of Bitcoin and cryptocurrency business – WeExchange and BitFunder. WeExchange was a Bitcoin depository and currency trading service while BitFunder was a platform that enabled customers to buy and trade tokenized shares listed on the service.

When the going was good, Montroll allegedly took illegal possession of customer Bitcoin deposits to fund his lavish lifestyle. Prosecutors on the case say he converted some of the Bitcoins invested by customers into U.S. dollars. He then spent the money on exotic vacations, grocery shopping as well as various personal expenses.

Another Mt. Gox-esque Swindle

It all went bad for Montroll when BitFunder suffered a cyber-attack in 2013. Suspected hackers took advantage of loopholes in the platform’s security to siphon more than 6,000 BTC. Montroll was suddenly in a position where he didn’t have enough to cover the stolen funds just like with Mt. Gox, the popular defunct Bitcoin exchange.

Instead of coming out clean to his customers, Montroll perpetrated a ruse that portrayed the platform as still being solvent. He continued to promote BitFunder and was able to raise an additional 978 BTC.

During the hack investigation, Montroll is accused of sending fake screenshots to investigators showing non-existent Bitcoin holdings. By lying to investigators, Montroll put himself at risk of obstruction charges being brought up against him.

On Monday, Montroll pleaded guilty before U.S. Magistrate Judge James L. Cott on charges of securities fraud and obstruction of justice. He faces up to 20 years in prison.

What do you think about Montroll’s fate? Let us know your thoughts in the comment section below.

The post Bitcoin Trader Pleads Guilty to Securities Fraud, Faces 20 Years in Prison appeared first on Ethereum World News.

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