BitFunder Founder Charged by SEC for Stealing $61 Million Worth of Bitcoin

Today, the U.S. Securities and Exchange Commission (SEC) brought charges against Jon E. Montroll and his exchange BitFunder for operating an unregistered securities exchange and defrauding users. On top of that, the agency also charged the operator — Montroll — with making false and misleading statements in connection with an unregistered offering of securities. BitFunder was a platform that permitted users to buy and sell virtual “shares” of various digital currency-related enterprises in exchange for Bitcoin.

“We allege that BitFunder operated unlawfully as an unregistered securities exchange.  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.  We will continue to focus on these types of platforms to protect investors and ensure compliance with the securities laws,” said Marc Berger, Director of the SEC’s New York Regional Office.

The SEC’s complaint, filed in federal district court in Manhattan, charges Montroll and BitFunder with violations of the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctions and disgorgement plus interest and penalties. 

The agency alleges Montroll operated BitFunder as an unregistered online securities exchange and defrauded exchange users by misappropriating their Bitcoin, and also for failing to disclose a cyberattack on BitFunder’s system that resulted in the theft of more than 6,000 Bitcoin. Going off the price of Bitcoin today, that’s about $61,800,000.

“As alleged in the complaint, Montroll defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on the exchange’s system and the resulting bitcoin theft.  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,” said Lara S. Mehraban, Associate Regional Director of the SEC’s New York Regional Office.

Unfortunately for Montroll, his legal troubles don’t stop with the SEC: Also today, in a parallel criminal case, the U.S. Attorney’s Office for the Southern District of New York filed a complaint against him for perjury and obstruction of justice during the SEC’s investigation. This implies that Montroll, in some way, must have not fully cooperated with the SEC during the agency’s investigation.

This case comes as the SEC is cracking down on other companies and individuals it believes are partaking in shady business within the crypto-space. In January of this year, the agency advised people to “exercise caution” with Bitcoin and other digital currencies.

Subscribe to our newsletter

Late last year, it was reported that the Iranian government was interested in utilizing Bitcoin and other cryptocurrencies as a way of bypassing economic sanctions levied against the country. But the government has apparently changed its mind: Today, the Central Bank of Iran announced that it has never recognized Bitcoin as an official currency and conducts no transactions in it or other cryptocurrencies.

According to Iran Front Page, the country’s central bank has denied ever recognizing Bitcoin as an official currency, along with the idea that it was actively facilitating Bitcoin transactions. The bank also warned Iranian citizens about the high risks of making investments in the potentially volatile market, saying that there’s a chance they “may lose their financial assets.” Moving ahead, the organization is cooperating with other institutions to develop mechanisms to control and prevent the use of digital currencies in the country. The bank put it as follows:

“The wild fluctuations of the digital currencies along with competitive business activities underway via network marketing and pyramid scheme have made the market of these currencies highly unreliable and risky,”

Countries Creating Their Own Coins

Despite all the FUD that accompanies announcements such as these, there are some positive developments. Iran’s Information and Communications Technology (ICT) Minister Mohammad-Javad Azari Jahromi also declared today that Iran’s Post Bank is working on a locally developed cryptocurrency, which will need to be tested by the ICT. It’s unclear exactly how far into research or development the bank is in creating this new coin.

Iran would not be the first country to develop its own digital currency as a way of bypassing financial blockades. Just yesterday Venezuela launched its new coin, the Petro, which is backed by the South American country’s oil reserves.

Late last week, Europe’s newest digital currency, the Korona — which runs on the Lightning Network and is being touted as more stable, safer, and cheaper to use than its competitors — was launched in Budapest, Hungary. Jean-Marc Stiegemeier, Korona’s CEO, is optimistic about the future of the crypto-industry:

“Over the next few years we are going to see a revolution in the banking sector,” Stiegemeier, said. “Within ten years cryptocurrency will be used and accepted worldwide.”

Although sanctions on Iran are not as heavy as they were before the 2015 nuclear deal with the West, the country is still, for the most part, cut off from major international payment networks like Visa, Mastercard, and PayPal. As is the case in other parts of the world, such as Africa, this economic stalemate is making decentralized payment methods like Bitcoin more and more appealing.

Union Catholic High School in Scotch Plains, New Jersey is teaching its students about cryptocurrencies. Mr. Tim Breza’s Business and Personal Finance Class is the focus of a CNBC documentary that is showcasing how cryptocurrencies like Bitcoin and associated blockchain technologies are being introduced and taught in high school and college classrooms.

Mr. Breza, a 28-year-old history and financial literacy teacher, first considered adding cryptocurrencies to his Business and Personal Finance class at the beginning of this school year after a few students approached him in September and October. The students were interested in learning more about the industry and began asking him what he knew about Bitcoin and other digital currencies.

“If one student’s talking about it, many of them are talking about it,” Breza said. “So I figured we needed to include it.”

Juniors and seniors are eligible to take his elective course, in which students learn about budgeting, credit cards, taxes, investing, entrepreneurship, and how to create business plans. After receiving approval, Breza has added a section on cryptocurrencies — focusing on the history of cryptography and the applications of blockchain technology.

“I’ve very excited that the students and Union Catholic is being exposed to this… and that the UC administration supported teaching this to our students,’’ said Breza. “Not too many schools are even thinking about teaching about cryptocurrency. We’re not teaching it in the sense that you have to invest it, we are just giving the facts of it. Blockchain is the key to all of this. That’s the revolutionary piece to it.’’

What do the students think?

Despite Breza’s assertion that the class is not teaching about cryptocurrencies from an investing standpoint, some students have chosen to do their own research. Junior Max Berg, for example, chose to buy Bitcoin last year. When the digital currency hit $19,000 in December, he cashed out, using his profits as seed money to start a retail business — buying Supreme clothes and accessories and selling them on to his peers.

“UC is always on the edge of new technology with our laptops and other things, so this is just that next step of teaching what the future of investments are going to be,’’ said Berg. “It’s been a hobby of mine for years now, and it’s cool to see how big it has gotten and that the school is open to teaching about is great.’’

Another student in the class, senior Thomas Monahan, believes his progressive teachers are to thank for introducing the high schoolers to the new technology:

“The teachers and administrators at Union Catholic always find ways to give us an edge and help us learn and make us better than other high schools,’’ said Monahan. “They teach us valuable things about life things that will help us in the future.”

While this subject may be new to high schools, it’s already a popular topic at universities across the country — and the job market for the crypto-space is booming, too.  LinkedIn says there are now 28 times as many people citing “cryptocurrency” skills on their profiles and 5.5 times as many people with “Bitcoin” skills than there were just five years ago.

As cryptocurrency usage becomes more widespread both above and below the law, various authorities are increasingly required to perform seizures on funds used in criminal cases. Thanks to the various anonymity properties of digital coins, however, it’s proving difficult to track these forfeitures. This lack of transparency leaves critics of the government musing over the possibility that not all digital currency is being sold fairly and through the correct channels. If only there was some way of publicly recording details regarding funds acquired through forfeiture and their sale…

Seizures are Rife, Reports are Less So

There is no shortage of examples of government agencies seizing digital currencies. High profile cases like that of Alexandre Cazes, the ringleader behind global dark web marketplace Alpha Bay, and Ross Ulbricht, the mastermind behind Silk Road have involved huge sums of cryptocurrency being turned over to the government.

More recently, 513 Bitcoins were seized from a seller of counterfeit pharmaceuticals in Utah, and Fortune reports a kidnapping case in which a man was bundled into what he thought was an Uber and was forced to surrender private keys at gunpoint. Those behind the incident were able to make off with $1.8 million in ETH tokens. They promptly converted these to BTC which then soared in price. What remains unclear is who should receive all that extra cash.

There are many more examples of forfeiture involving digital currency making the total amount of seized funds incredibly difficult to work out. This is exacerbated by anonymity properties of digital coins, along with the penchant for secrecy within some of the agencies making the seizures.

A website,, exists that documents cases of forfeiture in the States. However, their records are fleeting. They’re regularly updated and old cases are removed with the addition of new ones. In addition, there are often long periods between the seizure of assets and their appearance in any records and some sales of cryptocurrency aren’t reported at all.

It seems somewhat ironic that the very technology behind digital currency, the blockchain, could provide the transparency needed in such matters. An attorney who has worked extensively on cases of forfeiture, Alex Lakatos, feels that some form of central registry would be beneficial:

“This country is weirdly lacking in central registries… we don’t know how much property has been seized.”

Since there is no law obliging the government to provide such a ledger, one has yet to be created. It’s argued that increased transparency would likely tip criminals off to the methods used by law enforcement and thus undermine operations.

However, there are plenty who feel that this lack of transparency is completely unacceptable and promotes underhand behaviour from those working in government agencies. Clifford Histed, an attorney at K&L Gates spoke to Fortune of the historical precedent for embezzlement in cases of forfeiture:

“I’ve spent 23 years in law enforcement and, unfortunately, I believe as long as police have been seizing cash, some have been skimming it… I don’t think Bitcoin will prove any different.”

Whilst there is no hard evidence to suggest that government agents have been misappropriating funds from seizures, the ease with which it could be taking place concerns lawyers and libertarians alike. An investigation into the Marshals Service last September uncovered examples of the agency using seized funds to pay for such unnecessary luxuries as “high-end granite countertops and expensive custom artwork.” Amusingly, much of this was found at the new Asset Forfeiture Academy in Houston. Surely, with such incidents occurring and the numbers of seizures only set to grow, there should be some effort made to provide transparency to avoid allegations of corruptions.




New alliance to facilitate the software company’s ability to accept cryptocurrencies.

Software development company ZenSoft has entered into a strategic partnership with the OPEN Platform to facilitate the acceptance of cryptocurrencies in its enterprise software development projects.

OPEN, a San Francisco and Toronto based blockchain initiative, provides a comprehensive architecture for integrating blockchain technology into traditional software applications. Technologies such as OPEN’s blockchain Scaffolds, OPEN State transaction receipts and the OPEN API have allowed ZenSoft to incorporate cryptocurrencies into their business processes without the need for implementing all new management tools.

Ken Sangha, CEO of OPEN, said: “We are proud to announce ZenSoft as our first enterprise level customer. They were actively looking for a technology partner that could speed up and simplify their adoption of cryptocurrencies, and our architecture does just that by seamlessly integrating traditional software with the blockchain. ZenSoft is a perfect example of the value our platform delivers.”

David Tolioupov, CEO of ZenSoft, explained “With over 9 million lines of code in production, we understand that having the right tools at our disposal is essential for optimum productivity, so we’ve been looking at blockchain technology for a while now. Thanks to the ease of using the OPEN Platform, we can now accept payments in crypto and provide anonymized development services with little effort on our end. This partnership frees us up to concentrate on what we do best – building outstanding software for our clients.”

ZenSoft aims to be the AWS for development expertise. With over 100 team members distributed around the globe and offices in San Francisco, Minsk, Tel Aviv and Bishkek, the company specializes in leveraging cutting edge tools to make the software development process streamlined and efficient for its clients. “We believe that effective time tracking, communication and transparency are key to building high quality products and meeting deadlines. Development progress is accessible to you at all times via live, daily reporting tools.”

ZenSoft is a 150+ employee technology powerhouse that fuels the backends of some of Silicon Valley’s most notable startups. OPEN’s infrastructure will bolster ZenSoft’s enterprise, building highly scalable apps, through the acceptance of cryptocurrency payments. Thanks to this partnership, ZenSoft’s customers, which range from Fortune 500 companies to small startups, can pay their balance via OPEN’s platform, allowing ZenSoft to provide a service that is not only best in class, but positioned at the forefront of technological innovation.

The OPEN Platform bridges the gap between traditional application developers and the blockchain world. By providing standardized tools that interface the two architectures, developers can realize the benefits of cryptocurrencies without having to retool their applications from the ground up.

More information about Zensoft:
More information about OPEN:

On 15 February, within the Russian Investment Forum in Sochi, a memorandum of cooperation was signed between Novotrans, one of the largest railway rolling stock operators in Russia and the CIS, and UniversaBlockchain. The representatives of Novotrans told BitJournal.mediaabot this event.

“The main objective of our joint project with Novotrans is toperform the digitization of the train cars, transferring their statutes (loading, unloading, location) to blockchain and to include all details and specifics of the train maintenanceto the digital history of railway carriages. If all rolling stock processes are transferred to blockchain, it is impossible to fake or change any information about the railway carriage and the goods carried inside. This informationcan also be accessed by each participant of the network or transaction at any moment.

The “properblockchain” can significantly reduce production costs and speed up all the processes, and that is why this idea attracts not only big business, but government sector as well, including ArkadyDvorkovich, Deputy Prime Minister of the Russian Federation and Chairman of the Board of Directors of JSC Russian Railways, who has expressed his interest in the technology,” said Alexander Borodich, founder of the blockchain platform.

The joint project came into force upon signing the agreement. It can take about a year to fully transit the company’s cars to blockchain, forNovotrans operates tens of thousands of the train cars. Universa is the blockchain project which raised $28 million in token sale. It focuses on creating smart contracts in the real economy with the wide scope of application, from electronic keys in aerial vehiclesto transactions between financial institutions. The current speed of transactions on the Universa platform reaches 22 thousand per second.

Coinbase is a very hot company as of right now. That is not always for the right reasons either, unfortunately. The company recently provided a product update to explain what the future holds for this firm as of right now.

Addressing Recent Coinbase Issues and Reports

The year 2018 has been rather eventful for Coinbase in many different ways. Perhaps the biggest issue is how the company got caught up in some recent Visa-related drama. Hundreds of users complained about issues using their payment cards. Some even got charged twice or more time for specific transactions, which is unacceptable. It seems Visa will continue to crack down on all cryptocurrency activity for quite some time to come.

None of these issues were the result of Coinbase doing anything wrong either. Instead, the issue was completely with Visa and WorldPay. Both companies are resolving the problems as we speak. Most duplicate transactions have been reversed without problems.  Some lingering issues still need to be resolved in this regard. Coinbase can’t do anything about this issue as of right now, yet they will keep an eye on things.

There are also some concerns regarding the “cash advance” fees associated with Coinbase transactions. More specifically, some users suffer from an extra fee when buying cryptocurrency through this exchange. This is, once again, not Coinbase’s fault. They are working with their card processing company to iron out these problems. This process will take some time, though, and some banks will continue to charge them regardless.

All users can do is report such incidents to their banks. It is then up to the financial institution to explain the situation or address it accordingly. Buying cryptocurrencies with a payment card will always be a bit cumbersome. It is convenient, but the current fees make it unfavorable. Some users may be entitled to a fee reimbursement, although your individual mileage may vary in this regard.

PayPal Support Will be Removed Temporarily

There is also an update regarding PayPal support. A lot of users are not too impressed by Coinbase’s integration of this payment method. For now, the option will be enabled for a few weeks. After that period, PayPal support will be taken offline and go through an entire revamp. It is a bit unclear what to expect from this change, but it should lead to an improved user experience altogether.

Last but not least, using a bank account with Coinbase is still a solid option. This process also received some big updates, and the entire process is a lot more streamlined as of right now. By setting up the bank account through “instant connect”, users can purchase Bitcoin and other supported currencies right away. Overall, using a bank account with Coinbase is still the best option, for now, at least until all of the issues are resolved accordingly.

Not many other blockchain companies can boast new partners on a weekly basis. Ripple is one that can and, love it or hate it, the San Francisco based global payments provider has added to that list of over a hundred with five more this week.

In addition to banks in Brazil and India, Singaporean and Canadian money transfer service providers have also joined ranks with Ripple. According to reports Brazilian Bank Itaú Unibanco and remittance provider BeeTech have joined RippleNet in order to facilitate faster and cheaper global funds transfers. Indian bank IndusInd is also onboard alongside Canadian company Zip Remit who are all seeking to benefit from blockchain based financial transactions at a fraction of the cost.

Emerging Markets to Benefit Most

Emerging markets such as Brazil, India and China are home to 85% of the global population with almost 90% of people under 30 residing within those markets. They are a huge draw for companies such as Ripple looking to expand product adoption for xCurrent and RippleNet financial transfer platforms and networks. Over $60 billion was transferred into both India and China in 2017 and Brazil saw $600 million arrive from the US.

Head of business development at Ripple, Patrick Griffin, is confident that blockchain solutions are the way forward to improving the lives of users in emerging markets.

“The payments problem is a global problem, but its negative impact disproportionally affects emerging markets. Whether it’s a teacher in the U.S. sending money home to his family in Brazil or a small business owner in India trying to move money to open up a second store in another country, it’s imperative that we connect the world’s financial institutions into a payments system that works for their customers, not against them.”

Singaporean Partners to Expand RippleNet

Southeast Asia’s leading digital cross-border money transfer service provider InstaReM is also joining RippleNet to facilitate faster payments to other members of the rapidly growing network. It currently consists of over a hundred banks and other financial institutions providing real-time messaging, clearing and settlement of financial transactions. InstaReM’s partnership will allow their corporate and SME customers quick and hassle-free payouts to a number of destinations in the region.

Prajit Nanu, co-founder and CEO, stated; “We are pleased with this new partnership with Ripple which will see RippleNet members utilizing InstaReM’s unique payments mesh we have developed in Southeast Asia to further streamline payment processes.”

The company processes over 500,000 transactions per year, and is concentrated on connecting businesses and individuals from Australia, Canada, Hong Kong, Singapore, and India to over 60 countries worldwide.

RippleNet is not a part of the company’s cryptocurreny XRP which drives a separate system called xRapid. It was reported last week that Western Union were trialing transfers using xRapid and XRP.

A relaunch or rebrand usually does wonders for a cryptocurrency or blockchain project. The latest to revamp their look, website, and products is Berlin based Lisk which held an event yesterday. The team addressed an audience of over 500 highlighting new products, core updates, and a vision for the future.

The conference started out with a fancy introduction and a keynote by Max Kordek, co-founder and president of the Lisk Foundation. His main focus was on the goal to make blockchain technology open for everyone through the Lisk platform. Christian Vatter from Rlevance then took the stage to explain how the company achieved its new branding and what Lisk actually is.

Rebranded Lisk Products

In its strive to make blockchain technology accessible for everybody Lisk has built a blockchain application platform for users and developers to build upon, one with aspirations to be so successful that any Javascript developer can jump onboard immediately. The ethos being that it is not about the technology but the benefit to the people.

A new series of product names were then introduced by marketing lead Thomas Schouten. These included Lisk Core which remained unchanged, JS and Lisky which are part of the SDK, were rebranded to Lisk Element sand Lisk Commander, and the App became Lisk Hub. Lisk Nano will be discontinued and Lisk Hub will take its place to act as a one-stop dashboard, combining the functionality from the wallet and blockchain explorer. The presentation continued to show the basic workings and setup of the platform for developers. A series of professional videos were shown before a new website was unveiled to be launched this week.

Jacob Kowalewski then introduced the Lisk Academy which aims to educate on blockchain technology and instruct on how to implement blockchain into business. A technical panel explained Lisk Core 1.0.0. which will be a culmination of development efforts over the last few months. Its release will be a major back end milestone ahead of the rollout of the entire Sidechain Development Kit. Finally, Kordek wrapped up summarizing the event and thanking the contributors and audience.

Price Action Unaffected

The Lisk team offered some seriously slick marketing and plans for the future however its price action has taken a beating along with the rest of the altcoins during trading today. LSK is down over 10% on the day but marginally over the week, it is currently trading at $25.74 according to Coinmarketcap.

Looking at the bigger picture LSK has doubled since the February 6 dip and has shown steady increases over the past 3 months climbing over 250% from its late-November levels. The total market capacity for LSK is $2.6 billion and $223 million has been traded in the past 24 hours, the total supply is only 118 million. Lisk has shown to be a very resilient digital asset, and if the conference was anything to go by the team has huge plans for the future of blockchain industry.

Photo: Twitter @LiskHQ

Blockchain technology and cryptocurrencies can be threatened in some ways. Quantum computing is perhaps of the biggest concerns as of right now. The Cardano Foundation and think-tank Z/YN recently released their findings on this potential threat to public key cryptography.

Cardano Wants to Become Quantum Computing-Resistant

Quantum computing is the next logical evolution in the world of technology. It allows for must faster calculations and unparalleled processing power. At the same time, this technology also poses concerns for public key cryptography. Most cryptocurrencies and blockchains rely on this type cryptography. As such, addressing potential future problems at an early stage is incredibly important.

Cardano is one of the cryptocurrencies focused on building quantum-resistant solutions. More specifically, the currency’s developers will support additional signature schemes in the future. Ensuring their cryptography and blockchain is quantum computing-resistant is a top priority as of right now.  This particular cryptocurrency project prioritizes security and interoperability over anything else.

One of the main reasons Cardano is so appealing is because of its intriguing design. At its core, the currency offers special extensions which allow for adding more signature schemes through a soft fork. With this focus on quantum computing, any major security layer can be added without network disruption. Thus, the only question is if and when quantum computing may become a problem for Cardano.

Conducting Research for Industry Standards

According to the recent study by the Cardano Foundation and think-tank Z/YEN, that is only a matter of time. The study concludes how large-scale quantum computing will effectively break the security of public key cryptography. This will have all kinds of different consequences for solutions built on top of this technology. It extends well beyond cryptocurrencies and blockchain as well. Most online communication services in the world rely on public key cryptography as of right now.

It is evident the Cardano Foundation wants to proactively deal with this threat whenever possible. There are some available solutions to nullify this issue, yet an industry-wide response standard will need to be established first and foremost. Cardano Foundation Chairman Michael Parsons added:

“As part of our extensive blockchain research programme with Z/Yen, we are exploring a range of issues from the technological, to regulation and governance and industry applications. The topics explored are forward-looking by their very nature, and the possible impact of quantum computing on the blockchain is a case in point.”

A future without cryptography is unthinkable as of right now. This technology forms the foundation of virtually everything we do online. With a growing interest in cryptocurrencies and blockchain, public key cryptography will only become more commonly used as well. The Cardano Foundation wants to lead the charge in addressing future issues associated with quantum computing.