JON MONTROLL
Register Number: 56837-177
Age:    39
Race:    White
Sex:    Male
Located at: Beaumont Low FCI
Release Date: 06/26/2020

As the sentencing of Jon Montroll, the operator of Bitcoin-related services WeExchange and Bitfunder.com, approaches, the arguments between the US Government and the defendant regarding what the appropriate penalty has to be are becoming more intense.

It has already become apparent that the parties in the criminal case disagree on whether the defendant should get a probationary sentence or a prison term. The latest filings with the New York Southern District Court reveal that the disagreement spreads to the amount of restitution sought.

The Government requests that the Court order the defendant Jon Montroll to pay restitution to the victims of his scheme to defraud them in connection with the purchase and sale of Ukyo.Loan securities.

Montroll deceived investors and potential investors in a security he devised, Ukyo.Loan. Montroll launched this product on or about July 18, 2013. Montroll held Ukyo.Loan customer funds in the same commingled account as users of his Bitfunder and WeExchange services.

Beginning on July 28, 2013, Montroll’s systems were exploited by malicious users to access bitcoins held in the commingled account. Over the course of four weeks, those malicious users wrongfully extracted thousands of bitcoins that belonged to Montroll’s customers and investors. Importantly, the Exploit occurred in stages over a period of weeks.

Instead of immediately disclosing the Exploit to his users and investors on July 28, 2013, such that existing investors could redeem their shares for face value as promised, and thus reclaim their funds, before the Exploit reached its conclusion, Montroll concealed the existence of the Exploit, the Government notes. Further, on at least one occasion, Montrol falsely represented to customers that BitFunder was commercially successful.

Following the start of the Exploit, Montroll raised approximately 973 bitcoins through continued marketing of the Ukyo.Loan securities.

By the end of the Exploit, more than 200 Ukyo.Loan customers suffered losses, including those that invested before the Exploit began (and were deprived of their opportunity to withdraw before hackers took their funds) and those who invested after the Exploit began (who were deceived into believing they were buying a security related to a profitable business).

Following a meet and confer process, the Government has revised its proposed restitution figure to $183,530.04 compared to $212,629.32 initially sought. The defendant, however, disagrees.

In a Letter filed earlier today with the Court, the defense argues the Court should enter an order of restitution in the amount of $167,438 and should credit Jon Montroll with having already paid $137,367.55 towards that amount, leaving $30,070.45 in unpaid restitution.

The heart of the defense’s argument is that the reason why purchasers of Ukyo Loans were not able to redeem their Ukyo Loans is emphatically not because Montroll failed to disclose the hack. It is because, within the first 28 hours of the hack, more than 77% of the Bitcoins held in the WeExchange system had been stolen and, only 14 hours later, more than 99% of the Bitcoins previously held in the WeExchange wallet had been stolen. According to the defense, even if Jon Montroll had disclosed the hack after the first 28 hours of the hack, it would have been impossible for anyone with a claim to Bitcoins held in the WeExchange wallet to get more than a miniscule portion of their Bitcoins back.

Based on the restitution information provided to date, the Court should credit Jon Montroll with restitution payments of:

a $20,000 payment to the Registry of the Court;
a $25,000 payment to the victims of misappropriation;
$76,495.49 in payments to the post-hack purchasers of Ukyo Loans; and
$15,872.06 in other payments to the post-hack purchasers of Ukyo Loans,
towards his agreed-upon restitution of $167,438, leaving total unpaid restitution of $30,070.45.

The case continues at the New York Southern District Court.

US Govt updates on victim identification ahead of BitFunder operator sentencing

Since the last conference, the Government has identified 256 user accounts that suffered losses as a result of Jon Montroll’s securities fraud.


As the sentencing of Jon Montroll, the operator of Bitcoin-related services WeExchange and Bitfunder.com, approaches, the United States Government has filed a Letter with the New York Southern District Court informing the Court regarding the Government’s efforts to identify victims of Montroll’s offense and to notify those victims of these proceedings.

Since the last conference, the Government has identified approximately 256 user accounts that suffered losses as a result of the defendant’s securities fraud. The Government has managed to associate names or email addresses to some 230 of those user accounts. The remaining accounts could not be associated with names or email addresses. Based on the Government’s analysis, these victims lost approximately $212,629.32 in total. The total loss figure is based on losses of 2,258.898876 bitcoin and a July 26, 2013 bitcoin price of $94.13 per bitcoin.

For those identified victims residing in the United States, the Government has sent written notice informing them of the April 2, 2019 sentencing proceeding and of their right to be heard in connection with sentencing. For those victims residing abroad, the Government has contacted the relevant foreign Government or provided notice to the identified victims directly. As of the date of the letter (March 26, 2019), the Government has not received any victim impact statements.

As FinanceFeeds has earlier reported, Montroll’s counsel has argued in favor of a probationary sentence. But the Government pushes for a harsher punishment and argues that a sentence within the range of 27 to 33 months’ imprisonment is reasonable and appropriate in this case.

Montroll has pleaded guilty to securities fraud and obstruction of justice for deceiving investors and potential investors of virtual security known as Ukyo.Loan in connection with Montroll’s discovery of a catastrophic computer hack of his business, and for his lies to the U.S. Securities and Exchange Commission during the SEC’s investigation into that hack.

By December 2012, Montroll operated two different Bitcoin-related web services. First, Montroll operated WeExchange, Australia, Pty. Ltd, known as “WeExchange,” which functioned as a bitcoin depository and currency exchange service. Second, Montroll launched “Bitfunder.com,” an online platform that facilitated the purchase and trading of virtual shares in investment opportunities offered mostly by others. Those two services interlinked: Users of BitFunder were required to create a WeExchange account to facilitate BitFunder transactions, and any investments through BitFunder were held on WeExchange in what was referred to as the “WeExchange Wallet.”

Beginning in late July 2013, and continuing for about a month, until August 27, 2013, a hacker or hackers exploited a weakness in BitFunder’s programming code to confer credits to themselves that they did not earn. When Montroll discovered the Exploit, he attempted to cover it up. Montroll transferred a large amount of bitcoin he had stored elsewhere into the WeExchange system to backfill the losses, but did not disclose the fact of the Exploit to his users.

By the early fall of 2013, the Securities and Exchange Commission (SEC) began investigating the Exploit and Montroll’s response. As part of that investigation, the SEC conducted an investigative deposition of Montroll. During that interview, Montroll falsely denied to the SEC that the Exploit had caused losses and falsely claimed that he had managed to detect and halt the Exploit within its first few hours. A few weeks after the initial interview, Montroll admitted that the Exploit had, in fact, been successful and that users’ bitcoins had been taken.

On February 20, 2018, the United States charged Montroll by Criminal Complaint with perjury and obstruction of justice.

On July 23, 2018, Montroll consented to the filing of Information, which charged Montroll with securities fraud and obstruction of justice. That same day, Montroll pleaded guilty, pursuant to a plea agreement with the Government.

The sentencing of Montroll is currently scheduled for April 2, 2019.

Victim & Witness Services

The Office’s Victim and Witness Coordinator provides important services to victims and witnesses of federal crimes, including providing information about compensation for expenses and court-ordered restitution.

SDNY Victim and Witness Coordinator
United States Attorney's Office
One St. Andrew's Plaza
New York, New York 10007
1-866-874-8900

Victim Services
The Office is committed to protecting the rights of crime victims.  If you are a victim of a crime being prosecuted by our Office, our Victim and Witness Unit can make sure that you are notified of important stages of the case and can help refer you to other agencies that provide important services, including compensation and counseling. Learn about your rights as a victim

Case Updates
In general, the Government attempts to identify each victim in a given case, and to provide those victims with the information relevant to the case through the Department of Justice’s Victim Notification System. In cases where, due to the number of victims involved, or for other reasons, such notification is impracticable, the Government may use other methods to communicate with victims, including posting relevant information online.  Click on the links below for more detailed information about specific cases:

• United States v. William Tierney
• United States v. JP Morgan Chase NA
• United States v. St. Lawrence, et al., 16 Cr. 259 (CS)
• United States v. Michael Mendlowitz & Richard D. Hart, 17 Cr. 248 (VSB)
• U.S. v. Pokerstars et al., 11 Civ. 2564 (LBS) (including Full Tilt Poker and Absolute Poker)
• Operation Ghost Click
• United States v. Richard Moseley, 16 Cr. 079 (ER)
• United States v. Travell Thomas, et al., S4 15 Cr. 667 (KPF)
• United States v. General Motors Company (“GM”)
• United States v. Alex Yücel, S1 13 Cr. 834
• U.S. v. Toyota Corporation
• U.S. v. Bernard L. Madoff and related cases
• U.S. v. Chan Ming Fon
• U.S. v. Tsastsin et al., S2 11 Cr. 878 (LAK)
• U.S. v. Anuradha Saad & Richard Adelson (Impath, Inc.)
• U.S. v. Myron Olesnyckyi (Monster) (PDF)
• U.S. v. Ian Stuart
• U.S. v. Mario S. Levis
• U.S. v. Joseph P. Collins
• U.S. v. Avi Ayache et al.
• U.S. v. All Right, Title and Interest of Assa Corp.
• U.S. v. James Nicholson
• Mount Vernon Money Center (MVMC)
• Specialist Cases
• U.S. v. Scott Tucker

Additional Resources

• New York State Crime Victims Board
• U.S. DOJ Office for Victims of Crime
• Safe Horizon

Witness Services
If you have been notified that you are required to appear as a witness for the Government in a case or other legal proceeding being handled by this Office, the Victim/Witness Unit will make arrangements for your travel and lodging, which we will prepay. If you are coming from outside the local court area, you should not make travel arrangements yourself.

• Instructions for Witnesses Appearing on Behalf of the United States Government (PDF)
• Victim/Witness Brochure (PDF).

Complaints
If you believe a Department of Justice employee failed to provide crime victim rights, you may submit a complaint form.

• Complaint Form (English)
• Complaint Form (Español)

If after submitting a Complaint Form you continue to believe an employee of the Department of Justice has failed to provide the rights established under the Crime Victims Rights Act of 2004, 18 U.S.C. § 3771, you may file a complaint with the Office of the Victims’ Rights Ombudsman of the Department of Justice:

Marie A. O'Rourke    Marie.O’Rourke@usdoj.gov
Victims’ Rights Ombudsman
Executive Office for United States Attorneys
Department of Justice
RFK Main Justice Building
950 Pennsylvania Ave., N.W.
Room 2261

I have not. I have just sent the FBI agent referred to above an inquiry as to whether or not the government considers me a victim. According to the source, I should have been contacted regarding sentencing. From an article linked within the quoted article:

Victim & Witness Services

The Office’s Victim and Witness Coordinator provides important services to victims and witnesses of federal crimes, including providing information about compensation for expenses and court-ordered restitution.

SDNY Victim and Witness Coordinator
United States Attorney's Office
One St. Andrew's Plaza
New York, New York 10007
1-866-874-8900

Victim Services
The Office is committed to protecting the rights of crime victims.  If you are a victim of a crime being prosecuted by our Office, our Victim and Witness Unit can make sure that you are notified of important stages of the case and can help refer you to other agencies that provide important services, including compensation and counseling. Learn about your rights as a victim

Case Updates
In general, the Government attempts to identify each victim in a given case, and to provide those victims with the information relevant to the case through the Department of Justice’s Victim Notification System. In cases where, due to the number of victims involved, or for other reasons, such notification is impracticable, the Government may use other methods to communicate with victims, including posting relevant information online.  Click on the links below for more detailed information about specific cases:

• United States v. William Tierney
• United States v. JP Morgan Chase NA
• United States v. St. Lawrence, et al., 16 Cr. 259 (CS)
• United States v. Michael Mendlowitz & Richard D. Hart, 17 Cr. 248 (VSB)
• U.S. v. Pokerstars et al., 11 Civ. 2564 (LBS) (including Full Tilt Poker and Absolute Poker)
• Operation Ghost Click
• United States v. Richard Moseley, 16 Cr. 079 (ER)
• United States v. Travell Thomas, et al., S4 15 Cr. 667 (KPF)
• United States v. General Motors Company (“GM”)
• United States v. Alex Yücel, S1 13 Cr. 834
• U.S. v. Toyota Corporation
• U.S. v. Bernard L. Madoff and related cases
• U.S. v. Chan Ming Fon
• U.S. v. Tsastsin et al., S2 11 Cr. 878 (LAK)
• U.S. v. Anuradha Saad & Richard Adelson (Impath, Inc.)
• U.S. v. Myron Olesnyckyi (Monster) (PDF)
• U.S. v. Ian Stuart
• U.S. v. Mario S. Levis
• U.S. v. Joseph P. Collins
• U.S. v. Avi Ayache et al.
• U.S. v. All Right, Title and Interest of Assa Corp.
• U.S. v. James Nicholson
• Mount Vernon Money Center (MVMC)
• Specialist Cases
• U.S. v. Scott Tucker

Additional Resources

• New York State Crime Victims Board
• U.S. DOJ Office for Victims of Crime
• Safe Horizon

Witness Services
If you have been notified that you are required to appear as a witness for the Government in a case or other legal proceeding being handled by this Office, the Victim/Witness Unit will make arrangements for your travel and lodging, which we will prepay. If you are coming from outside the local court area, you should not make travel arrangements yourself.

• Instructions for Witnesses Appearing on Behalf of the United States Government (PDF)
• Victim/Witness Brochure (PDF).

Complaints
If you believe a Department of Justice employee failed to provide crime victim rights, you may submit a complaint form.

• Complaint Form (English)
• Complaint Form (Español)

If after submitting a Complaint Form you continue to believe an employee of the Department of Justice has failed to provide the rights established under the Crime Victims Rights Act of 2004, 18 U.S.C. § 3771, you may file a complaint with the Office of the Victims’ Rights Ombudsman of the Department of Justice:

Marie A. O'Rourke    Marie.O’Rourke@usdoj.gov
Victims’ Rights Ombudsman
Executive Office for United States Attorneys
Department of Justice
RFK Main Justice Building
950 Pennsylvania Ave., N.W.
Room 2261

Judge Richard M. Berman of the New York Southern District Court has cancelled the sentencing of of Jon Montroll, the operator of Bitcoin-related services WeExchange and Bitfunder.com, as the parties in the case disagree on the precise amount of restitution the defendant is due.

The sentencing, scheduled for April 2, 2019 at 12:30 pm, was cancelled yesterday. The Judge ordered counsel for the parties to meet and confer forthwith to determine jointly the precise amount of restitution. Failing that, the parties should propose a date for the hearing to establish restitution, including witness(es) to be called, and documents to be relied upon.

Since the last conference, the Government has identified approximately 256 user accounts that suffered losses as a result of the defendant’s securities fraud. The Government has managed to associate names or email addresses to some 230 of those user accounts. The remaining accounts could not be associated with names or email addresses. Based on the Government’s analysis, these victims lost approximately $212,629.32 in total. The total loss figure is based on losses of 2,258.898876 bitcoin and a July 26, 2013 bitcoin price of $94.13 per bitcoin.

Montroll’s counsel has argued in favor of a probationary sentence. But the Government pushes for a harsher punishment and argues that a sentence within the range of 27 to 33 months’ imprisonment is reasonable and appropriate in this case.

Montroll has pleaded guilty to securities fraud and obstruction of justice for deceiving investors and potential investors of virtual security known as Ukyo.Loan in connection with Montroll’s discovery of a catastrophic computer hack of his business, and for his lies to the U.S. Securities and Exchange Commission during the SEC’s investigation into that hack.

By December 2012, Montroll operated two different Bitcoin-related web services. First, Montroll operated WeExchange, Australia, Pty. Ltd, known as “WeExchange,” which functioned as a bitcoin depository and currency exchange service. Second, Montroll launched “Bitfunder.com,” an online platform that facilitated the purchase and trading of virtual shares in investment opportunities offered mostly by others. Those two services interlinked: Users of BitFunder were required to create a WeExchange account to facilitate BitFunder transactions, and any investments through BitFunder were held on WeExchange in what was referred to as the “WeExchange Wallet.”

Beginning in late July 2013, and continuing for about a month, until August 27, 2013, a hacker or hackers exploited a weakness in BitFunder’s programming code to confer credits to themselves that they did not earn. When Montroll discovered the Exploit, he attempted to cover it up. Montroll transferred a large amount of bitcoin he had stored elsewhere into the WeExchange system to backfill the losses, but did not disclose the fact of the Exploit to his users.

By the early fall of 2013, the Securities and Exchange Commission (SEC) began investigating the Exploit and Montroll’s response. As part of that investigation, the SEC conducted an investigative deposition of Montroll. During that interview, Montroll falsely denied to the SEC that the Exploit had caused losses and falsely claimed that he had managed to detect and halt the Exploit within its first few hours. A few weeks after the initial interview, Montroll admitted that the Exploit had, in fact, been successful and that users’ bitcoins had been taken.

On February 20, 2018, the United States charged Montroll by Criminal Complaint with perjury and obstruction of justice.

On July 23, 2018, Montroll consented to the filing of Information, which charged Montroll with securities fraud and obstruction of justice. That same day, Montroll pleaded guilty, pursuant to a plea agreement with the Government.

US Govt updates on victim identification ahead of BitFunder operator sentencing

Since the last conference, the Government has identified 256 user accounts that suffered losses as a result of Jon Montroll’s securities fraud.


As the sentencing of Jon Montroll, the operator of Bitcoin-related services WeExchange and Bitfunder.com, approaches, the United States Government has filed a Letter with the New York Southern District Court informing the Court regarding the Government’s efforts to identify victims of Montroll’s offense and to notify those victims of these proceedings.

Since the last conference, the Government has identified approximately 256 user accounts that suffered losses as a result of the defendant’s securities fraud. The Government has managed to associate names or email addresses to some 230 of those user accounts. The remaining accounts could not be associated with names or email addresses. Based on the Government’s analysis, these victims lost approximately $212,629.32 in total. The total loss figure is based on losses of 2,258.898876 bitcoin and a July 26, 2013 bitcoin price of $94.13 per bitcoin.

For those identified victims residing in the United States, the Government has sent written notice informing them of the April 2, 2019 sentencing proceeding and of their right to be heard in connection with sentencing. For those victims residing abroad, the Government has contacted the relevant foreign Government or provided notice to the identified victims directly. As of the date of the letter (March 26, 2019), the Government has not received any victim impact statements.

As FinanceFeeds has earlier reported, Montroll’s counsel has argued in favor of a probationary sentence. But the Government pushes for a harsher punishment and argues that a sentence within the range of 27 to 33 months’ imprisonment is reasonable and appropriate in this case.

Montroll has pleaded guilty to securities fraud and obstruction of justice for deceiving investors and potential investors of virtual security known as Ukyo.Loan in connection with Montroll’s discovery of a catastrophic computer hack of his business, and for his lies to the U.S. Securities and Exchange Commission during the SEC’s investigation into that hack.

By December 2012, Montroll operated two different Bitcoin-related web services. First, Montroll operated WeExchange, Australia, Pty. Ltd, known as “WeExchange,” which functioned as a bitcoin depository and currency exchange service. Second, Montroll launched “Bitfunder.com,” an online platform that facilitated the purchase and trading of virtual shares in investment opportunities offered mostly by others. Those two services interlinked: Users of BitFunder were required to create a WeExchange account to facilitate BitFunder transactions, and any investments through BitFunder were held on WeExchange in what was referred to as the “WeExchange Wallet.”

Beginning in late July 2013, and continuing for about a month, until August 27, 2013, a hacker or hackers exploited a weakness in BitFunder’s programming code to confer credits to themselves that they did not earn. When Montroll discovered the Exploit, he attempted to cover it up. Montroll transferred a large amount of bitcoin he had stored elsewhere into the WeExchange system to backfill the losses, but did not disclose the fact of the Exploit to his users.

By the early fall of 2013, the Securities and Exchange Commission (SEC) began investigating the Exploit and Montroll’s response. As part of that investigation, the SEC conducted an investigative deposition of Montroll. During that interview, Montroll falsely denied to the SEC that the Exploit had caused losses and falsely claimed that he had managed to detect and halt the Exploit within its first few hours. A few weeks after the initial interview, Montroll admitted that the Exploit had, in fact, been successful and that users’ bitcoins had been taken.

On February 20, 2018, the United States charged Montroll by Criminal Complaint with perjury and obstruction of justice.

On July 23, 2018, Montroll consented to the filing of Information, which charged Montroll with securities fraud and obstruction of justice. That same day, Montroll pleaded guilty, pursuant to a plea agreement with the Government.

The sentencing of Montroll is currently scheduled for April 2, 2019.

Guess the number came into play with this article: https://steemit.com/bitcoin/@dasusu/see-photos-of-bitcoin-exchange-operator-who-lied-about-6000-bitcoin-hack-arrested-by-the-fbi

Not sure what the nursing homes have to do with it. Surely they can't bring enough funds to pay back the funds, right? But 30 years? WTF. And that is for "for perjury and obstruction of justice". Does someone know what exactly he said or did that renders to him actually having to live half of his life in jail?

“My dad likes to do magic for us and other kids. This is the closest way I imagine my dad to lie” – says the son of Jon Montroll, accused of Bitcoin fraud.

All stories, including stories about fraud, have at least two sides. The FinanceFeeds team has been keeping an eye on cryptocurrency fraud cases and has been trying to provide as much detail as possible on some of the major enforcement actions in this respect. Nevertheless, FinanceFeeds’ managing editor has to admit that now and then, it is worth reminding ourselves that all those fraudsters and scammers are human beings too. This has been shown by the sentencing submission filed earlier this week by Jon Montroll, accused of Bitcoin fraud.

The defendant pleaded guilty to securities fraud and obstruction of justice in July this year. As the Court will soon decide on his penalty (he faces a substantial prison term), the defense seeks that the Court sentence Montroll to a period of probation together with conditions of home detention and community service to be determined by the Court.

The sentencing submission includes details about the legal grounds for the defense pushing for such a penalty. The document also includes dozens of letters from Montroll’s friends and community members speaking in his favor.

Montroll is a father to four children, ages to 8 through 12. Although Montroll did not ask for his children to write any letters, one of his sons did so. Below is an excerpt of this letter (the rest contains personal information which FinanceFeeds’ managing editor believes does not need to be disclosed).




“Dear Judge,

I heard my dad asking friends for letters that describe him. I wanted to write a letter too.

Dad told me he made the biggest mistake of his life years ago and now he has to be punished for it and said that we should learn from his mistakes and to not make them and to sure to always be honest. My dad likes to do magic for us and other kids. This is the closest way I imagine my dad to lie. He always shows us how tricks work so I am not sure that counts.

Dad is a kind forgiving father is always very cheerful and fun to be around. He plays games with us. He has taught valuable life lessons like don’t do drugs and don’t smoke. He shows us old and new moves and we always have the best Birthday and Christmas is incredible when things are sad…”

Back to adult reality, let’s note that the counts to which Montroll pleaded guilty and for which he has accepted responsibility are both Class C felonies. The rules provide for maximum term of imprisonment of 20 years. However, the defense notes that a probationary sentence of between one and five years is available.

Hon. Richard M. Berman
United States District Judge
Daniel Patrick Moynihan
United States Courthouse
500 Pearl St.
New York, NY 10007-1312

Courtroom: 17B
Chambers Phone: (212) 805-6715
Deputy Phone: (212) 805-6715