A SpaceX engineer pleaded guilty to conspiracy to commit securities fraud by selling insider trading tips on the dark web, Reuters reported Friday, citing the U.S. Securities and Exchange Commission and Department of Justice.
James Roland Jones, also known as "MillionaireMike," illegally bought names, birth dates, Social Security numbers and other information from 2016 to 2017 to open a fraudulent brokerage account, the Justice Department said Thursday.
Jones allegedly acquired insider information from an undercover agent of the Federal Bureau of Investigation in April 2017 on a dark web insider trading forum and told the agent he had separate non-public information on another company, Forbes reported.
"Dark web" is a term that refers to a subset of the internet that is deliberately anonymous, requiring specific software to access content and host websites that support illegal activity.
The case was the first in which the SEC has carried out an enforcement action against securities violations on the dark web.
"This case shows that the SEC can and will pursue securities law violators wherever they operate, even on the dark web," Bloomberg quoted David L. Peavler as saying. Peavler is chief of the SEC's Fort Worth regional office.
Jones, 33, of Redondo Beach, California, also devised a scheme on the dark web to sell what he falsely claimed were insider tips, the DOJ and SEC said. Several users paying in Bitcoin bought these tips and traded based on the information Jones provided.
According to Forbes, the longest-ever insider trading sentence is 12 years, handed down in 2012 to New York attorney Matthew Kluger, who pleaded guilty to obtaining insider information working for major law firms.
Jones faces a maximum penalty of five years imprisonment, prosecutors said. A date for his sentencing has yet to be set.
