Jon E. Montroll, the former cryptocurrency exchange BitFunder’s founder was charged with fraud by the Securities and Exchange Commission.
According to a SEC statement, BitFunder and M. Montroll ran the operation as an “unregistered securities exchange” and defrauded users of that exchange.
He failed to disclose a cyberattack on the exchange which resulted in the hack of more than 6000 Bitcoins.
The director of the SEC’s New York Regional Office, Marc Berger, said in a statement,
“Platforms that engage in the activity of a national securities exchange, regardless of whether that activity involves digital assets, tokens, or coins, must register with the SEC or operate pursuant to an exemption.”
The Associate Regional Director of the SEC’s New York Regional Office, Lara S. Mehraba, mentioned,
“We will continue to vigorously police conduct involving distributed ledger technology and ensure that bad actors who commit fraud in this space are held accountable.”
It is still to be determined if cryptocurrencies are utility tokens or securities that would fall under the responsibility of the SEC.
A few weeks ago, the SEC Chairman Jay Clayton mentioned in a hearing before the Senate Banking Committee that federal financial agencies may ask Congress for increased legislation on cryptocurrency-related operations. M. Clayton also said he was not satisfied that people believed that cryptocurrency trading exchanges have the same level of security as the stock exchange.
The SEC has studied many cases during the past months regarding cryptocurrency-related fraud and began to charge fraudsters. For example, by the end of January, AriseBank who said to have raised the largest ICO ever registered got their assets frozen by the SEC.
The Securities and Exchange Commission is engaged to regulate the cryptocurrency market to make it safer for bigger investment. The regulations and the work done by that organisation will help eliminate the fraudulent individuals.