Jon Montroll, CEO of one of the deceased bitcoin-titled trading platform BitFunder and WeExchange deposit service, was found guilty and jailed for prison for securities fraud and obstruction of justice.

Montroll, based out in Saginaw, Texas also referred to as Ukyo, will spend 14 months in prison for deceiving investors of his "Ukyo.Loan" scheme, for shifting funds without investor's knowledge or approval, and also lying to the Federal Bureau of Investigation (FBI) and Securities Exchange Commission (SEC) agents at the time of the investigation. 

He was also offered three years of monitored release and to pay $167,480 as fine.

Before this in July 2018, Montroll was also found guilty for such activities Manhattan U.S. Attorney Geoffrey S. Berman stated: 

“Jon Montroll lied to his investors and, after his lies caught the attention of the SEC, lied to them, too. The sentence he received serves as a reminder that this Office will not overlook those who violate their obligation, to be honest with investors and the regulators working to protect them.”

In July 2013, BitFunder's tool was hacked, which resulted in the theft of 6,000 bitcoins from Montrol's popular fiat-to-crypto platform, We Exchange.

According to the DOJ's statement, Montrol reportedly failed to speak about the lost currencies with investors or regulatory authorities. On one occasion, he encouraged the operation as “commercially successful” rather than being bankrupt. Montrol reiterated the same claims to the FBI and provided the SEC with a “provided the SEC with a falsified screenshot” of investor's funds when they started to examine the exploit.

Montrol's hoax continued to rise where he offered “materially false and misleading answers” about his businesses and hack. 

Moreover, at the time of the investigation, it was discovered that Montrol used  WeExchange as a personal bank. The attorney's office mentioned at that time.

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

Just BitFunder was going to be closed, Montroll started offering a new service, Ukyo.Loan, also known as a "round-about investment" Attorney also stated that Montrol called investments as "personal loan."

Similar to various other crypto exchange owners, who think they can retrieve huge client losses without anyone's notice, Montroll didn't mention what happened to its clients.

Also, he attempted to return client funds from his own money. However, this doesn't work, and just after a few months of the cyber-attack, BitFunder users started facing issues while withdrawing funds from the site. Only after that, Montroll shut down his website.

Once investors belonging to the Securities and Exchange Commission started looking for BitFunder, Montroll made a story and said he was able to detect the hack very soon. He assured that, once he noticed it was happening, he was able to block it soon afterward.

Prosecutors were looking for the most severe penalty, but they remain unsuccessful in their efforts. At the same time, Montroll will become free before October end as soon as his prison time starts in Texas.