The SEC has taken action against a Californian man for fraudulently offering advice on insider trading on a darknet market.
March 19, 2021 | AtoZ Markets –The US Securities and Exchange Commission (SEC) announced filing charges against California resident James Roland Jones in the first-ever enforcement action from the commission to target securities fraud on the darknet.
According to the March 18 complaint, Jones is accused of accessing a darknet-based insider trading forum in late 2016 to search for material non-public information (MNPI) on which to trade securities.
He was unsuccessful in getting any useful MNPIs from the forum, but in the spring of 2017 Jones allegedly began selling insider tips himself under the false pretense that he was aware of the MNPI obtained from both the forum and corporations sources with which he claimed to be personally affiliated. Jones is believed to have received approximately $27,000 worth of BTC for the fraudulent tips.
Jones’s advice is believed to be general predictions about whether a stock would rise or fall, and Jones sometimes sold advice so that the same stock would rise in both directions to different clients. When the tips failed, Jones offered another free tip in exchange for positive reviews in a darknet marketplace.
The alleged scammer also started operating a collective investment group in 2017, pretending to do business on behalf of investors. However, Jones did not operate with the investors’ funds, instead returning a small amount of the invested capital as alleged earnings to entice his victims to deposit additional funds.
The SEC accuses Jones of having acted in violation of the anti-fraud provisions of the Exchange Act and seeks the return of ill-gotten gains plus interest, civil penalties and permanent injunctions.
David Peavler, director of the SEC’s Fort Worth regional office, noted that the agency has committed significant resources to investigating crimes on the dark web, stating:
“This case shows that the SEC can and will pursue securities law violators wherever they operate, including on the dark web. We have committed personnel and technology to pierce the cloak of anonymity as these criminals try to rid themselves of their crimes.”
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