A SpaceX engineer pleaded guilty Thursday to exchanging insider trading tips on the dark web, the first SEC case taking action against alleged securities fraud on the dark web.
SpaceX engineer James Roland Jones of Hermosa Beach, California, pleaded guilty to conspiracy to commit securities fraud after he tried to both buy and sell purported insider trading tips on the dark web under the username MillionaireMike, according to the Department of Justice.
James allegedly bought insider information from an undercover FBI agent in April 2017 on a dark web insider trading forum, and also told the agent he had separate non-public information on another company.
Prosecutors say Jones purchased names and social security numbers off the dark web to open up fake accounts to conduct trades, while the SEC in a separate set of charges alleges Jones also falsely claimed he had insider information and sold it to others on the dark web for bitcoin.
Jones faces a maximum five years in prison, and agreed to a settlement with the SEC
“This case shows that the SEC can and will pursue securities law violators wherever they operate, even on the dark web,” David Peavler, director of the SEC’s Fort Worth Regional Office, said in a statement. “We have committed staff and technology to pierce the cloak of anonymity these wrongdoers try to throw over their crimes.”
The longest-ever insider trading sentence is 12 years, handed down in 2012 to New York lawyer Matthew Kluger, who pleaded guilty to gaining insider information working for large law firms specializing in mergers and acquisitions.