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The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 Million

The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 Million

In today’s edition of Bitcoin in Brief we cover a number of stories related to crime from around the cryptosphere: an exchange operator pleads guilty to securities fraud, a scammer is fined over $1.9 million for bitcoin and binary options fraud, police get a crypto course and a new type of ransomware attack is discovered.

Also Read: EU Study: International Nature of Cryptocurrency Markets Is a Challenge for Regulators

Exchange Operator Pleads Guilty

Jon E. Montroll, a 37-year-old from Texas which was arrested by the FBI for trying to cover up massive client losses after his exchange was hacked, pleaded guilty to one count of securities fraud and one count of obstruction of justice on Monday. Each charge carries a maximum penalty of 20 years in prison. Montroll operated two bitcoin services, Weexchange which functioned as a bitcoin depository and currency exchange service, and Bitfunder which facilitated the purchase and trading of shares of businesses that listed on the platform. During the summer of 2013, hackers stole approximately 6,000 bitcoins from Weexchange, and, as a result, the two ventures lacked the bitcoin necessary to cover what was owed to users, which he tried to hide.

Manhattan U.S. Attorney Geoffrey S. Berman said: “Montroll deceived his investors and then attempted to deceive the SEC. He repeatedly lied during sworn testimony and misled SEC staff to avoid taking responsibility for the loss of thousands of his customers’ bitcoins.”

Scammer Fined Over $1.9 Million

The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 MillionA federal court has ordered Dillon Michael Dean of Colorado, and his UK-registered company The Entrepreneurs Headquarters Limited (TEH), to pay over $1.9 million in civil monetary penalties and restitution. A judge found that Dean engaged in a fraudulent scheme to solicit bitcoin from the public, lied that customers’ funds would be invested in products including binary options, and misappropriated clients’ funds. He also failed to register with the CFTC as a Commodity Pool Operator.

According to the findings, from approximately April 2017 to January 18, 2018, Dean solicited at least $499,264.04 worth of bitcoin from at least 127 members of the public. He promised to convert this into fiat and invest it on customers’ behalf in a pooled investment, including trading binary options on an online exchange. He lured victims by false claims of trading expertise and promises of high returns in Youtube videos and Facebook posts. But he never actually engaged in trading on behalf of customers, and his purported trading profits were fictitious.

Porn Ransomware?

The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 MillionThe Israeli police has announced that its cyber investigators have identified a new type of ransom attack targeting online porn viewers. The warning to the public explained that in recent weeks there have been a number of complaints about ransom demands via e-mail. The messages said that the recipient’s computer had malware installed, which activated the camera to film when vising a site displaying sexual content. In order to avoid the distribution of the allegedly filmed videos to all his contacts, the recipient was required to pay a ransom in bitcoin. The message included the recipient’s e-mail and password to give it credibility. However, the investigators found out that the threats were not really backed up by videos and that the e-mail addresses and passwords were taken from old sites that contained hacked e-mail addresses.

London Police’s Crypto Course

The Daily: Exchange Operator Pleads Guilty, Scammer Fined Over $1.9 MillionA City of London Police spokeswoman has confirmed the launch of a new cryptocurrency course at their Economic Crime Academy. “It is designed to provide delegates with the skills and knowledge required to recognise and manage cryptocurrencies in an investigation. On successful completion of this course, participants will understand how to detect, seize and investigate the use of cryptocurrencies in an investigative context. It will be the first of its kind and has been developed in response to feedback from police officers nationally who felt there wasn’t enough training available in this area.” She also added that a pilot of the course was already conducted, and another is planned for August.

What do you think about today’s news tidbits? Share your thoughts in the comments section below.


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