In the dark web, MillionaireMike was a busy guy.
Since 2016, the account of that name has bought names, addresses, birth dates and social security numbers on the underground markets that trade in illicit goods online. He took that personal information to open bank accounts in the name of strangers and used that account to make transactions based on inside information he collected from others. Eventually, he sold the alleged insider himself to an undercover FBI agent.
MillionaireMike is James Roland Jones, a 33-year-old SpaceX engineer who pleaded guilty to conspiracy to commit securities fraud. A Justice Department criminal complaint details a series of investments Jones made in the spring of 2017, largely through an unnamed conspiracy account, based on false inside information provided by undercover food. That summer, the relationship turned upside down: Jones told the undercover agent on July 25 what profits an unnamed company would make by investing $ 5,000 in his name. Two days later, the numbers came out. They were identical.
The detailed scheme of the DOJ is not particularly unusual. But a complaint filed by the Securities and Exchange Commission on Thursday delves into Jones’ alleged business – and is the first time the regulator has set its sights on the dark web.
The SEC portrays Jones less as a privileged intelligence trader than a crook, assuming he is dealing with false insider advice, based on presence rather than real information. He claims that Jones first entered the world of insider trading on the web at the end of 2016, when he found a wiki that listed various hidden markets. One of them was advertised as “the insider trading community of publicly traded (sic) companies,” a description that matches that of the so-called onion site called How to Beat Wall Street.
The price of entering the forum was authentic inside. Instead of predicting this, Jones would have tried instead to guess what future earnings reports he would have, in order to give a semblance of perspective. He was wrong, then he was wrong again, and finally on the third attempt he was right, says the SEC. He was in.
But not for long. How to Beat Wall Street did not distribute lifetime subscriptions; you still had to prove your worth if you wanted to change your mind. Jones couldn’t. Within three months, according to the complaint, the moderators revoked his membership. The SEC says that although Jones claims that he did not receive any useful information from the group, it triggered a revelation: there was a market for privileged advice, but most people could not enter exclusive forums on the dark web. MillionaireMike could fill that gap.
The complaint says Jones began selling “insider tips” in the spring of 2017. “His advice was just assumptions based on Jones’ own research and speculation,” the SEC said, and they were generally basic: a stock will rise, or fall. Jones allegedly sold tips for the same stock in both directions, offering the following free advice for free when it didn’t work – as long as they left a nice review on the dark site on which they operated. The SEC claims that Jones received $ 27,000 in bitcoin from eager investors throughout the scheme. Jones’ lawyer did not respond to a request for comment.
While the case marks the SEC’s first fees for securities fraud on the dark web, its outlines are otherwise unnoticed. The agency tracks dozens of insider trading cases each year, though those numbers have dropped dramatically under the Trump administration. “He invented something and persuaded others to trade in bitcoin,” says Urska Velikonja, an expert in securities regulation and law enforcement at Georgetown University Law Center. “I see this as a quick breach of the factory, not as a change in the direction of the SEC.”