Jon E. Montroll Charged with Lying to SEC Over Bitcoin Hack

Jon E. Montroll, the man behind the now-defunct bitcoin exchange BitFunder, has been taken into federal custody on charges of perjury and obstruction of justice. Federal prosecutors allege Montroll lied under oath to SEC investigators about a 2013 hack that drained 6,000 bitcoins—worth over $60 million today—from customer accounts, then falsified records to cover his tracks.

Geoffrey S. Berman, U.S. Attorney for the Southern District of New York, stated Montroll’s sworn testimony directly undermined the SEC’s probe into the collapse of BitFunder and WeExchange. “As alleged, the defendant repeatedly lied during sworn testimony and misled SEC staff to avoid taking personal responsibility for the loss of thousands of his customers’ bitcoins,” Berman said. “These charges signify that we will use the full force of the federal criminal law to protect the integrity of the SEC’s investigative process.”

The hack, which occurred between July 28 and July 31, 2013, exploited flaws in BitFunder’s code, allowing hackers to generate and withdraw 6,000 bitcoins that weren’t theirs. Montroll claimed the system had blocked the withdrawals and that the software flaw was fixed within hours. But the evidence shows otherwise—BitFunder and WeExchange were left insolvent, unable to repay users.

In November 2013, during a sworn SEC deposition, Montroll denied the exploit had succeeded. He also handed over a doctored screenshot showing 6,679.78 BTC in the WeExchange Wallet as of October 13, 2013—claiming it reflected funds held for users. Investigators say that number was fabricated. At the time, the wallet was already depleted.

FBI Assistant Director-in-Charge William F. Sweeney Jr. slammed Montroll’s actions as a deliberate attempt to obstruct justice. “As alleged, Montroll committed a serious crime when he lied to the SEC during sworn testimony,” Sweeney said. “In an attempt to cover up the results of a hack that exploited weaknesses in the programming code of his company, he allegedly went to great lengths to prove the balance of bitcoins available to BitFunder users in the WeExchange Wallet was sufficient to cover the money owed to investors.”

Montroll, known online as “Ukyo,” is expected to appear before U.S. Magistrate Judge Jeffrey L. Cureton in the Northern District of Texas this afternoon. The case shines a harsh light on the Wild West era of early cryptocurrency platforms, where accountability was scarce—and lies carried a steep price.