SpaceX engineer pleads guilty to DOJ insider accusations

A SpaceX engineer pleaded guilty to a Justice Department charge of insider trading, the agency announced on Thursday after using information obtained from the dark web to trade public securities with nonpublic information.

The DOJ criminal case against James Roland Jones of Hermosa Beach, California, came after an FBI investigation in 2017.

The government’s announcement of the plea agreement identified Jones as an engineer for SpaceX, although the agency did not specify whether he currently works for the space company and whether he did it at the time of the fraud.

The Securities and Exchange Commission simultaneously accused Jones of “perpetrating a scam to sell what he called ‘insider tips'”. The SEC did not quote SpaceX in its complaint.

SpaceX, DOJ and SEC did not immediately respond to CNBC’s requests for comment.

The DOJ said Jones used the nickname “MillionaireMike” to buy information – such as an address, birth dates 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 like Google”.

Jones then used that information to conduct financial transactions on material nonpublic information, the DOJ claims. In April 2017, a secret FBI agency gave Jones “alleged inside information related to a publicly traded company,” said the DOJ.

“From April 18, 2017 to May 4, 2017, Jones and a conspirator conducted several securities transactions based on this alleged insider information,” said the DOJ.

The SEC accused Jones of anti-fraud violations of federal securities law. Jones agreed to a forked agreement with the SEC and faces a maximum sentence of five years in federal prison because of his appeal to the DOJ.

“This case shows that the SEC can and will prosecute securities law violators wherever they operate, even on the dark web,” said director of the SEC’s Fort Worth regional office, David Peavler, in a statement.