In its first-ever case involving the “dark web,” the U.S. Securities and Exchange Commission (SEC) has charged a California man, alleging that he sold purported insider trading tips online.
The SEC alleged that James Roland Jones carried out a fraudulent scheme by selling tips that he falsely claimed provided buyers with material, non-public information on the dark web.
According to the SEC’s complaint, several users purchased tips from Jones using Bitcoin and made trades based on the information they received.
In a parallel criminal case, Jones pleaded guilty to conspiracy to commit securities fraud.
According to the U.S. Department of Justice (DoJ), Jones, using the online name “MillionaireMike,” purchased personal information (including names, birthdates and social security numbers) on the dark web to engage in insider trading, and he traded on purported inside information provided by an undercover FBI employee in 2017.
A date for sentencing in the criminal case has yet to be set.
The SEC said that Jones also agreed to a settlement that, subject to court approval, “permanently enjoins him from further violating [securities laws], and reserves the determination of disgorgement and civil penalties for a later date.”
“This case shows that the SEC can and will pursue securities law violators wherever they operate, even on the dark web,” said David Peavler, director of the SEC’s Fort Worth office. “We have committed staff and technology to pierce the cloak of anonymity these wrongdoers try to throw over their crimes.”