SpaceX headquarters in Los Angeles, California.
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A SpaceX engineer has pleaded guilty to a charge of the Department of Justice for privileged transactions, the agency announced on Thursday, after using the information obtained on the dark web to trade public securities with non-public information.
The DOJ’s criminal case against James Roland Jones in Hermosa Beach, California, came following an FBI investigation in 2017.
The government’s announcement of the plea agreement identified Jones as a SpaceX engineer, although the agency did not specify whether he currently works for the space company and did so at the time of the fraud.
The Securities and Exchange Commission simultaneously accused Jones of fraudulently selling what he called “insider trading.” The SEC did not name SpaceX in its complaint.
SpaceX, the DOJ and the SEC did not immediately respond to CNBC’s requests for comment.
The DOJ said Jones used the company name “MillionaireMike” to buy information – such as address, date of birth and social security numbers – on the dark web. The dark web, as defined by the SEC, “refers to anything on the Internet that is not indexed or accessible through a search engine such as Google.”
Jones then used this information to conduct financial transactions on material, non-public information, the DOJ claims. In April 2017, an undercover FBI agency offered Jones “alleged inside information about a listed company,” the DOJ said.
“From April 18, 2017, to May 4, 2017, Jones and a conspirator conducted numerous securities transactions based on this alleged inside information,” the DOJ said.
The SEC has accused Jones of anti-fraud violations of federal securities law. Jones has agreed to a bifurcated settlement with the SEC and faces up to five years in federal prison, according to his DOJ plea.
“This case shows that the SEC can and will prosecute those who violate securities law wherever it operates, even on the dark Internet,” said David Peavler, director of the SEC’s Fort Worth regional office, in a statement.