‘Legal Trading Too Hard’ Scheme With Bitcoin Nets $700K

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By Andrew Ramonas

A Philadelphia-area day trader used digital currency to mask payments in a brokerage account takeover scheme that led to at least $700,000 in illicit profits, the SEC said Oct. 30.

The case against Joseph Willner of Ambler, Pa., marks the first time the commission has announced an enforcement action brought with help from its Cyber Unit, which launched in September under SEC Chairman Jay Clayton. The unit is intended to combat retail brokerage account intrusions and other cyber-related wrongdoing.

“Account takeovers are an increasingly significant threat to retail investors, and it is exactly the type of fraud our new Cyber Unit is focusing on,” SEC Enforcement Division Co-Director Stephanie Avakian said in a statement. “We are committing substantial resources to combating cyber-based threats to protect investors and our markets from intruders who manipulate the system for their own illicit gain.”

Willner faces civil Securities and Exchange Commission fraud charges in the U.S. District Court for the Eastern District of New York ( SEC v. Willner , E.D.N.Y., No. 1:17-cv-06305, 10/30/17 ). He also was charged criminally in the same court with conspiring to commit securities and computer fraud based on related alleged misconduct ( United States v. Willner , E.D.N.Y., 17M527, 10/30/17 ).

‘Legal Trading Too Hard’

Willner generated profits through an operation that involved accessing the accounts of more than 100 unknowing victims and making trades he used to his advantage from about 2014 to 2016, the SEC said. The trades artificially affected the prices of stocks that Willner traded in his own accounts, according to the commission.

The day trader had some of the proceeds converted into bitcoin, which he sent to another person involved in the scheme, the commission said. At one point during the fraud, the individual, whom the commission didn’t identify, used an online messaging application to tell Willner “legal trading too hard,” according to the agency.

That person and possibly other people working with him took over the victims’ accounts and coordinated with Willner on trades, the SEC said. The individual directed Willner to pay him half the day trader’s profits for his help, according to the commission. “Yeah u remmbr deal.. I can do that shit in half half profit,” the person said in a message to Willner, according to the Justice Department.

In another online conversation with a second unnamed individual, Willner said: “Prob too shady paying him in bitcoin after making gains with him,” according to the DOJ.

Willner faces up to 25 years in prison if convicted, the U.S. Attorney’s Office for the Eastern District of New York said. The SEC is seeking the return of his ill-gotten profits with interest, as well as penalties and a permanent injunction against future violations.

Information on Willner’s lawyer wasn’t immediately available.

To contact the reporter on this story: Andrew Ramonas in Washington at aramonas@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

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