The US Securities and Exchange Commission (SEC) on Wednesday charged defunct Bitcoin ‎securities exchange BitFunder and its principle Jon E. Montroll with fraud, that saying they ‎operated an unregistered online securities exchange and concealed critical information while tapping the ‎market for millions of dollars‏.‏‎ ‎

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In a lawsuit filed in US federal court in Manhattan, the SEC said that the owner ‎of the Bitcoin venue Ukyo failed to disclose a cyberattack on BitFunder’s system that ‎resulted in the theft of more than 6,000 bitcoins. It also accused him with defrauding exchange users by misappropriating their assets.‎

The Bitcoin-denominated securities site, which launched in December ‎‎2012 and held around $16 million in assets, ceased operations ‎in 2013 and transferred out leftover bitcoins to users.‎

Bitfunder was one of the most interesting parts of the major cryptocurrency’s history because ‎it allowed startups to raise funding for their businesses in a manner that ‎may have been even easier than what is seen with the ICO ‎phenomenon currently.‎

By making misleading public statements, Montroll and his digital marketplace ‎sold unregistered securities, regardless of whether that activity involved ‎digital assets, tokens or coins, the SEC said. ‎

The SEC has warned for months that cryptocurrency and related fundraisers may ‎work as a way for scammers to illegally dodge the strict rules placed on regular ‎investments.‎ The warned investors against throwing money into ICOs because their organizers launch investment schemes without even attempting to follow US ‎securities laws.‎

Earlier last week, the SEC suspended trading in shares of three companies due to questions about ‎their recent PRs which advertised the buyout of cryptocurrency and ‎blockchain-related assets.‎

Marc Berger, Director of the SEC’s New York Regional Office, commented: ‎“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.” ‎

Lara Mehraban, Associate Regional Director of the SEC’s New York ‎Regional Office, added: ‎“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.”