In the dark web, Millionaire Mike was busy.
As early as 2016, the account with that name bought names, addresses, dates of birth and Social Security numbers on the underground markets that trade in illegal online goods. He used that personal information to open bank accounts in the name of unwitting strangers, and used those accounts to conduct transactions based on insider information gathered from others. In the end, he sold alleged insider information himself – to an undercover FBI agent.
Millionaire Mike is James Roland Jones, a 33-year-old SpaceX engineer who has pleaded guilty to conspiracy to commit securities fraud. A criminal complaint from the Justice Department describes a series of investments Jones made in the spring of 2017, mostly through the account of an unnamed conspirator, based on false inside information from the undercover fed. That summer, the relationship would turn: Jones told the undercover agent on July 25 what the earnings of an unnamed company would be, investing $ 5,000 on his behalf. The figures came out two days later. They were identical.
The schedule outlined by the DOJ is not particularly uncommon. But a complaint filed Thursday by the Securities and Exchange Commission goes much deeper into Jones’ alleged activity – and is the first time the regulator has set its sights on the dark web.
The SEC paints Jones less as a savvy insider trader than a scammer, allegedly selling false insider tips based on suspicions rather than factual insight. It claims Jones first entered the world of dark web insider trading in late 2016, when he found a wiki listing several hidden marketplaces. One of them advertised itself as “the community for exchanging Insider information about the (sic) listed companies,” a description that matches that of a so-called onion site called How to Beat Wall Street.
The price for access to the forum was real insider information. Instead of providing that, Jones instead tried to guess what upcoming earnings reports would include, to give the semblance of insight. He was wrong, then wrong again, and finally on the third try, he was right, the SEC says. He was in.
But not for long. How to Beat Wall Street did not give out lifetime memberships; you had to keep proving your worth if you wanted to exchange tips. Jones couldn’t. Within three months, the complaint says, moderators have revoked his membership. The SEC says that while Jones claims he didn’t get any useful information from the group, it did cause a revelation: There was a market for insider tips, but most people couldn’t access exclusive dark web forums. MillionaireMike could fill that gap.
The complaint says Jones started selling “ insider tips ” in the spring of 2017. would go down. Jones reportedly sold tips for the same stock both ways and offered the next tip for free if it didn’t work out – as long as they left a nice review on the dark website they did business on. The SEC alleges that Jones received $ 27,000 worth of bitcoin from avid investors throughout the scheme. Jones’s attorney did not respond to a request for comment.
While the case marks the SEC’s first charge of dark web securities fraud, its outline is otherwise unremarkable. The agency handles dozens of insider trading cases every year, although those numbers have fallen dramatically under the Trump administrations. “He made up something and convinced others to trade in exchange for bitcoin,” said Urska Velikonja, a securities regulation and enforcement expert at Georgetown University Law Center. “I see this as a simple offense, not a change in the direction of SEC enforcement.”