Bitcoin Global News (BGN)
July 24, 2018 -- ADVFN Crypto NewsWire -- Not all Crypto
projects are on the up and up. Just as with any business idea, some
exist simply to cheat people.
BitFunder was a firm that
seemed to be just another Crypto exchange. All in all, its offering
did not appear, at first glance, to be much different from other
sites that are already out there like Cex.io, LocalBitcoins.com, and Kraken.
The firm’s one unique feature was
the fact that users of their site could sell shares of their
company, with Bitcoin.
This alone, should have raised
enough of a red flag for people to steer clear of BitFunder in that
it is the definition of an unregulated usage of securities.
Unfortunately, this was not the case.
In the end, however, nothing that
BitFunder was offering seems to have been legitimate at all. The
chief of the entire company has, as of Monday, been found
guilty of fraud related to securities as well as obstruction
of justice.
The beginning of the company being
tried in Federal Court appears tohave been when Jon Montroll, who was
effectively the head of BitFunder, gave false balance statements to
the Securities and Exchange Commission in an apparent attempt to
prove the legitimacy of his firm.
To make matters worse, he was only
doing this because the company was already under scrutiny and
closed, back in 2013, about twelve months after it first
opened.
That’s right. They barely even
lasted a year and in this case, it was due to being accused of
fraudulent business practices.
Just before the company shut down,
BitFunder was hacked to the tune of 6,000 Bitcoins, which at the
time, turned out to be just about enough for the founder to pay
back the users that Montroll already owed money based on debts at
his other company, according to
Bloomberg.
At this point, all of this may
sound just a bit convoluted. To add to the confusion is another
detail about what Montroll was finally found guilty of, this
year.
He did the hack,
purposefully.
Montroll needed the funds and it
can reasonably be assumed that he hired outside people to run the
hack, based on weaknesses in the code that he told them about. All
of this could be said to come from the fact that he was not only
found guilty of running the hack, but also of using the funds to go
on a personal spending spree.
What this clearly illustrates is
the importance of us doing our own research before giving any
Crypto project our hard earned coins. Particular to this sort of
situation is the importance of knowing the founding
team.
Most Blockchain networks are
supposed to be decentralized, meaning free
of the control of one group or really, any group. Even so, founding
teams still exercise a level of control over the Crypto funds on
their networks due to the fact that they coded them.
If you don’t feel that enough
evidence exists that points towards you truly owning your funds,
then don’t invest in the firm in question. Overall, through the
example of BitFunder, we see just how easy it is to lost sight of
the dual-importance of decentralization and true network
security.
By: BGN Editorial Staff
News:
BitFunder
Cryptocurrency
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