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The SEC Has Arrested the Owner of Bitcoin Exchange BitFunder

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  • Patrick Thompson
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    The SEC has arrested the owner of Bitcoin exchange BitFunder — Jon Montroll — for operating an unregistered securities exchange.

The SEC Has Arrested the Owner of Bitcoin Exchange BitFunder
Cover image via u.today

The Securities and Exchange Commision (SEC) has pressed charges against the owner of the defunct cryptocurrency exchange BitFunder. Jon Montroll, also known as “UKYO,” has been charged for operating an unregistered securities exchange, for failing to disclose a security breach at BitFunder that resulted in the theft of more than 6,000 Bitcoin, and for making false and misleading statements related to unregistered securities.

Montroll operated two online Bitcoin Services: WeExchange Australia, Pty. Ltd. (WeExchange) and BitFunder.com (BitFunder). WeExchange provided Bitcoin depository and currency exchange services, BitFunder facilitated the purchase and trading of shares that Blockchain related companies listed through the BitFunder service.

BitFunder was launched in December 2012 and closed in November 2013. During the summer of 2013, a hacker breached the BitFunder program. The hacker was able to steal approximately 6,000 Bitcoin from the BitFunder WeExchange wallet. As a result of the theft, WeExchange and BitFunder did not have the funds to pay their users and the exchange became insolvent. Shortly afterward, BitFunder shut down.

More Charges

To add insult to injury, the SEC charged Montroll with two counts of perjury and one count of obstruction of justice for the investigation related to the 2013 insolvency and closure of WeExchange and BitFunder. On Montroll’s Balance sheet statement from October 13, 2013, the statement reports that the total amount of funds belonging to BitFunder users in WeExchange was 6,679.78 BTC, however, Montroll fabricated the balance sheet to achieve this number. At the time of the balance sheet statement, the 6,000 bitcoin had already been stolen from the WeExchange wallet. However, to conceal the losses and foul play that took place on the exchange, Montroll transferred his own funds to the BitFunder WeExchange wallet so that his businesses would appear solvent.

As a result of the events above, Montroll was taken into federal custody today for giving false sworn testimony and false documentation to the SEC. It is a bit strange to see authorities targeting a company over an event that took place so long ago, but the fact that Montroll lied during his first court appearances in 2013 may have warranted this lengthy investigation. The SEC’s enforcement on Montrell’s unregulated exchange comes days after the SEC halted the trading of three blockchain related public companies that they suspected of market manipulation. Montroll’s arrest adds to the narrative of the Commodities Futures Trading Commission (CFTC) and the SEC cracking down on the cryptocurrency markets.

About the author

Patrick Thompson is a freelance writer who has written for several publications in the past about a vast range of topics.  Thompson is an Economics & Philosophy major at Rutgers University, where he is currently completing his senior year; upon graduating, Thompson plans to go to law school. Thompson is currently the

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Bitcoin Price Can Be Easily Pushed Down by Whales: Professor John Griffin

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  • Alex Dovbnya
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    John Griffin says that rapid price swings are possible because it can be manipulated by deep-pocketed whales who are not stronger than ever

Bitcoin Price Can Be Easily Pushed Down by Whales: Professor John Griffin
Cover image via u.today

Economics professor John Griffin recently rang alarm bells over the impact of Bitcoin whales on the Bitcoin market. 

Griffin told Bloomberg that a few large players could easily push the BTC price down at a whim. 

"The problem with a few large players holding crypto is that when they sell they can easily push the price down, which makes the market susceptible to rapid swings."  

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Whales are getting more powerful 

According to data released by CoinMetrics, the number of orange coins controlled by deep-pocketed Bitcoin investors reached its highest point in four years in 2019. As of December, a whopping 42.1 percent of Bitcoin's total circulating supply is stored in wallets that hold between 1,000 and 1 mln BTC. 

While crypto exchanges are known to be the owners of the richest Bitcoin addresses, investor Aaron Brown warms some of the new whales on the block are family offices and affluent individuals who are not exactly keen Bitcoin believers who might be tempted to jump ship if things turn south. 

“I doubt they have infinite patience, and without significant growth in actual use, I would expect them to quietly withdraw to chase other promising technologies,” Brown said.

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Becrying Tether's impact on Bitcoin 

Speaking of those who don't believe in Bitcoin, Griffin probably takes the cake as one of the most prominent naysayers. Back in June 2018, together with his colleague Amin Shams, he published a paper that explores how Tether was allegedly responsible for propelling Bitcoin to new highs during the peak of the previous bull market in December 2018. 

At the beginning of November, the two academics came up with an even more shooking claim -- the historic ascent of Bitcoin to its current all-time high of $20,000 was the deed of a single whale on Bitfinex, the affiliated exchange of Tether.

Tether dismissed the updated study as a puff piece that was meant to back up a $1.4 trln lawsuit against the flagship stablecoin issuer. 

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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