The $9 million Bitcoin Scam started back in 2013. It took place in BitFunder and WeExchange. The scam’s story has many folds of lying, pretense, panicky cover-ups and so on. Last year Montroll, the founder of BitFunder was jailed for the 2013 Bitcoin scam.
In the scam, there was a loss of more than 6K BTC. When the hack took place Montroll in panicky response tried to pretend that the company can handle the case and in the process, he even lied to concerned authorities. In a way, you can say it was his attempt to control the reputational damage at the least. He intended to hide from the investors that their money is nowhere to be found.
As of now, he is fighting the case. The prosecutors are demanding another 27 months prosecution. When the hack took place the cost of BTC was $94 USD. But looking at the length of the case, the prices of the Bitcoin have come a long way too. At that time the loss was of $212,000 USD, whereas, today it would cost the company more than 9 million USD.
Montroll’s short-sighted attempts to save his face cost him dearly. Under pressure, as per reports, he even used some of his BTC reserved to cover the losses caused by the hack, in order to show a smooth functioning picture to the investors as well as the authorities. He even went to the extent of lying to U. S. Securities and Exchange Commission (SEC), which was obviously a bad idea, and this pulled him spirally downwards. He explained to the SEC that the company was able to deal with the losses and he didn’t reveal much about the actual scenario. His behavior can be compared to Mt Gox’s officials.
Post the hack, the lack of funds drove him to consider even the Ponzi schemes and to swap money from new users to the old ones. This kind of arrangement was not meant to last very long, and so it ended up in withdrawal difficulties, and various other crypto wallets orders. This ‘no-funds state’ lead to the shutdown of the company in 2013. In a way, the scenario was bound to cripple him, as lastly the exchange was not licensed. He used to issue- “Ukyo Notes”- the unregistered securities from Ukyo. What WeExchange has to do with all this, you may ask. Well, WeExchange was responsible for handling all the deposits of the company.
Basically his crimes boil down to misusing investors’ money, the exchange was not regulated, and lastly, he lied to the SEC authorities.
The entire matter is clear except for the fact that the govt. is not able to identify 230 investors out of 256 who were affected by the hack. Identifying is a critical step in order to make the repayments in place, under the correct name. If the identities of the remaining investors stay ambiguous, then the funds will not be released to the remaining investors. By far there are no traces of any kind of contact details of these 26 investors.
Overall the identified victims of the hack will receive a sum total of 2,258 BTC as per reports. This compensation would cost Montroll a sum total of 9 Million U.S. Dollars for the hacking victims. It is still a burning question of when and how will these investors get their money back.