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SEC accuses former bitcoin-denominated exchange of defrauding users

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SEC accuses former bitcoin-denominated exchange of defrauding users

The SEC on Feb. 21 charged a former bitcoin-denominated platform and its operator with operating an unregistered securities exchange and defrauding users of that exchange.

The regulator also charged the operator of making false and misleading statements in connection with an unregistered offering of securities.

In the lawsuit filed in the federal district court in Manhattan, N.Y., the regulator accused BitFunder and its founder, Jon Montroll, of operating BitFunder as an unregistered online securities exchange. The platform and its founder also allegedly defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on BitFunder's system that resulted in the theft of more than 6,000 bitcoins.

Montroll is also accused of selling unregistered securities that purported to be investments in the exchange and misappropriating funds from that investment.

BitFunder and Montroll are charged with violating the anti-fraud and registration provisions of federal securities laws. The complaint seeks permanent injunctions and disgorgement, plus interest and penalties.

Additionally, the U.S. Attorney's Office for the Southern District of New York on Feb. 21 filed a complaint against Montroll for perjury and obstruction of justice during the SEC's investigation.