In the dark web, MillionaireMike was a busy guy.
In 2016, the account with this nickname bought names, addresses, birth dates and social security numbers in clandestine markets that trafficked illicit products online. He took this personal information to open bank accounts in the name of involuntary strangers and used those accounts to do business based on inside information he obtained from other people. Eventually, he even sold alleged inside information – 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, primarily through an unidentified conspirator account, based on false inside information provided by the undercover agent. That summer, the relationship would change: Jones told the secret agent on July 25 what the earnings of an unidentified company would be, investing $ 5,000 in his name. Two days later, the figures were released. They were identical.
The outline detailed by the DOJ is not particularly uncommon. But a complaint filed by the Securities and Exchange Commission on Thursday delves much more deeply into Jones’ alleged activity – and this represents the first time the regulator has turned its attention to the dark web.
The SEC paints Jones less as an experienced insider than as a scammer, allegedly selling false insider tips based on guesses rather than real insights. He claims that Jones first entered the dark web insider trade in late 2016, when he found a wiki that listed several hidden markets. One of them announced itself as “the community for exchanging inside information about (sic) publicly traded companies”, a description that corresponds to that of a website called onion called How to Beat Wall Street.
The price of entry to the forum was genuine inside information. Instead of providing this, Jones allegedly tried to guess what the next earnings reports would be, in order to give an appearance of insight. He was wrong, and then wrong again, and finally, on the third try, he was right, says the SEC. He was inside.
But not by much. How to Beat Wall Street did not distribute lifetime memberships; you needed to continue proving your worth if you wanted to exchange tips. Jones, no. In three months, the complaint says, moderators revoked their membership. The SEC says that while Jones claims he didn’t get any useful information from the group, it sparked a revelation: there was a market for insider tips, but most people couldn’t get into exclusive dark web forums. MillionaireMike could fill that gap.
The complaint says Jones started selling “insider tips” in the spring of 2017. “His tips were just assumptions based on Jones’ own research and speculation,” the SEC claims, and were generally basic: a stock would go up or go down. Jones allegedly sold tips for the same action in both directions, offering the next tip for free when it didn’t work – as long as they left a good review on the dark website where they did business. The SEC says Jones received $ 27,000 in bitcoins from avid investors throughout the scheme. Jones’ lawyer did not respond to a request for comment.
While the case marks the SEC’s first accusations of securities fraud on the dark web, its outlines are anything but remarkable. The agency pursues dozens of insider cases every year, although those numbers have dropped dramatically during Trump’s administrations. “He invented something and convinced others to trade in exchange for bitcoin,” says Urska Velikonja, a specialist in securities regulation and enforcement at Georgetown University Law Center. “I see this as a common violation, not a change in the direction of SEC enforcement.”