The U.S. Securities and Exchange Commission (SEC) charged a Russian man in an alleged market manipulation scheme that involved hacking into retail brokerage accounts at both U.S. and Canadian brokers, which were then used to trade against dozens of accounts opened with false identities.
The SEC charged Dmitrii Yevgenyevich Kushnarev for his role in the alleged scheme that used thinly traded securities listed on the New York Stock Exchange (NYSE), Nasdaq and over-the-counter (OTC) markets to carry out illusory trading. The scheme generated approximately US$31 million in total proceeds and US$1.5 million in illicit profits.
According to the SEC’s complaint, between 2014 and 2021, Kushnarev participated in an alleged “account takeover scheme” that involved hundreds of brokerage accounts in Canada and the U.S. — across at least 10 firms — which were hacked and used to trade thinly traded securities. The aim was to manipulate the price of those securities, which Kushnarev allegedly traded against with accounts he opened under numerous false identities. The complaint lists 23 aliases used by Kushnarev at various U.S. and foreign brokerage firms.
In one example cited by the regulator, on March 9, 2018, “a hacked account held at a Canadian retail brokerage was forced to buy and sell thousands of shares of Evofem Biosciences Inc.,” which an alias account controlled by Kushnarev traded against, “executing directly against the hacked account at the Canadian brokerage.”
The complaint, filed in the U.S. District Court for the Northern District of Georgia, charges Kushnarev with violating the antifraud provisions of federal securities law.
The allegations have not been proven.