The SEC has charged
a SpaceX engineer with insider trading on the dark web.
The backstory. In the spring of 2017, an account with the moniker ‘MillionaireMike’ started listing ‘insider tips’ for sale on the dark web. The catch? MillionaireMike didn’t actually have any insider information to sell.
When James Roland Jones – the man behind the moniker – realized no one would pay him for his own stock tips, he came up with an alternative plan: pretend his tips, which were based on an combination of research and gut instinct, were the result of leaked information from Wall Street.
Far from a savvy inside trader, Jones was, at best, a scammer with dumb luck. His tips were basic: a stock would go up, or it would go down. Sometimes he sold tips for the same stock in both directions, promising to give the ‘loser’ the next tip for free in exchange for a good review.
By the time Jones was busted by an undercover FBI agent, he’d pocketed $27k in bitcoin.
Now… Jones has pleaded guilty to conspiracy to commit securities fraud in the first ever dark web fraud case.
The SEC has realized lots of illegal things happen on the dark web – bravo!
But is this really the case they want to mark their inaugural foray into the murky world of underground marketplaces? A case that hinges on insider trading… without any actual insider information?
I’m deferring to my fave ex-lawyer Matt LeVine on this one. Sure, Jones swindled a lot of people but, as Matt points
out, these people were willing participants in illegal trading (!) and, in some ways, deserved to be swindled.
In any case,
it’s too little too late for the SEC. Per Wired
, insider trading peaked on the dark web in 2018:
- “Today, insider trading activity is relatively scarce on the dark web… perpetrators have likely migrated to more secure encrypted channels instead.”