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Bitcoin Trader Pleads Guilty to Securities Fraud, Faces 20 Years in Prison

Joe E. Montroll of Saginaw Texas is facing up to 20 years in prison after admitting to lying to investigators about his role in the theft of Bitcoins deposited by customers of his platform. 2018 has seen a raft of arrests and convictions in the cryptocurrency space as law enforcement, and financial regulators work hard to sanitize the industry.

Platform Owner Stole Bitcoin Belonging to Investors

Before his arrest, Montroll operated a pair of Bitcoin and cryptocurrency business – WeExchange and BitFunder. WeExchange was a Bitcoin depository and currency trading service while BitFunder was a platform that enabled customers to buy and trade tokenized shares listed on the service.

When the going was good, Montroll allegedly took illegal possession of customer Bitcoin deposits to fund his lavish lifestyle. Prosecutors on the case say he converted some of the Bitcoins invested by customers into U.S. dollars. He then spent the money on exotic vacations, grocery shopping as well as various personal expenses.

Another Mt. Gox-esque Swindle

It all went bad for Montroll when BitFunder suffered a cyber-attack in 2013. Suspected hackers took advantage of loopholes in the platform’s security to siphon more than 6,000 BTC. Montroll was suddenly in a position where he didn’t have enough to cover the stolen funds just like with Mt. Gox, the popular defunct Bitcoin exchange.

Instead of coming out clean to his customers, Montroll perpetrated a ruse that portrayed the platform as still being solvent. He continued to promote BitFunder and was able to raise an additional 978 BTC.

During the hack investigation, Montroll is accused of sending fake screenshots to investigators showing non-existent Bitcoin holdings. By lying to investigators, Montroll put himself at risk of obstruction charges being brought up against him.

On Monday, Montroll pleaded guilty before U.S. Magistrate Judge James L. Cott on charges of securities fraud and obstruction of justice. He faces up to 20 years in prison.

What do you think about Montroll’s fate? Let us know your thoughts in the comment section below.


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Bitcoin Miner Shot By Taiwanese Gangsters

Freshwater Gang members Gao Qitang and Chen Yumin shot a bitcoin miner named Wu Nan when he failed to return their investment in his mining operation on time.

The shooting took place on April 14 in New Tapei City after Gao and Chen raised $1.5 million for Wu’s mining operation, expecting quick returns. Citing the Chinese ban on cryptocurrency exchanges and ICOs, Wu (nicknamed ‘Milk’) was unable to return their investment on time. Liberty Times Net reports that the gangsters paid Wu a visit and approached him to demand their money.

Following an argument, they drew their handguns (a Beretta and a Taurus) and fired at Wu seven times. Wu was shot but survived the incident, although presumably still owes the Freshwater Gang over a million dollars. Wu is one of many mining freelancers accepting seed capital to launch mining operations in Taiwan.

Suspect in handcuffs Source: Bitcoinist

China has announced plans to shut out Bitcoin mining on top of their ban on exchanges and ICOs, discussion of which may have led to a 20% crash in the crypto market when rumors of the plans emerged.

While bullish on blockchain, the Chinese government and central bank have taken multiple measures against cryptocurrency citing concerns of investor risk, lack of oversight, and environmental concerns.  China has relatively low electricity costs in many areas and is home to Bitmain, the manufacturer of the most popular Bitcoin mining hardware.

As such China houses the largest Bitcoin mining operations in the world and the government is also planning to observe the effects of Bitcoin mining on the environment and infrastructure. Currently, Bitcoin mining uses as much electricity as the island of Ireland and is set to use 0.05% of the world’s electricity supply by the end of the year.

Due to the crackdown, Bitmain has started moving offices abroad, receiving approval to purchase sites in the US and Switzerland as nations with low electricity costs and progressive regulations respectively.

The mining pool BTC.TOP also jumped ship and moved to Canada due to the affordable electricity and more lenient government policies regarding Bitcoin and cryptocurrencies.