On October 30th, the U.S. Securities and Exchange Commission (SEC) filed a case against a day-trader based in Ambler, Pennsylvania. Joseph P. Willner, age 42, was accused of running a market manipulation scheme through the unlawful take-over of at least 110 brokerage accounts. The SEC’s press release states that Willner used the unwitting investors’ funds to artificially increase stock prices and then traded against them to gain high profits.
The SEC further claims that Willner was sharing his profits with at least one other individual not included in the case, with whom he was communicating via online direct messaging applications using a pseudonym to disguise his real identity. In order to hide the profits, he used an unnamed Bitcoin exchange. He converted the funds from US dollars to Bitcoin, which were then transferred to his partner. The SEC revealed that at least $700,000 was amassed by Willner as a result from his alleged account take-over scam. The lawsuit claims that Willner and his cohort have been involved in this illegal activity from at least September 2016 through at least August 2017. Appropriate measures will be taken for the return of the illegal gains plus interest. Moreover, the SEC also seeks penalties and a permanent injunction.
Despite these cover-ups, Willner’s activities have ultimately been detected after about two years of fraudulent trading and market manipulation. Part of the release reads:
"To mask his payments to the other individual as part of a profit-sharing arrangement, Willner allegedly transferred proceeds of profitable trades to a digital currency company that converts US dollars to Bitcoin and then transmitted the Bitcoins as payment."
The SEC complaint, filed in the U.S District Court for the Eastern District of New York, accuses Willner of marketing manipulation and fraud. Both of these actions are in violation of federal securities laws and the stipulations provided by the SEC. The SEC warned that account take-over schemes like these are extremely dangerous and that the crime poses a major threat to retail investors.
The SEC’s newly found Cyber Unit was introduced in September 2017. The unit is especially focused on crimes involving virtual currencies, as well as Initial Coin Offerings (ICOs) and distributed ledger technology. Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, claimed that special measures are being taken to protect investors against cyber-based threats. She said that the unit is currently specifically focused on crimes involving account take-overs.