The US Securities and Exchange Commission (SEC) has filed a lawsuit against Philadelphia, Pennsylvania-based day trader Joseph Willner for allegedly using the digital currency Bitcoin to hide his profits. In the case filed on Oct. 30, 2017, the accused has unlawfully taken over more than 100 brokerage accounts and used the victim's’ funds to artificially increase stock prices then trade against them to gain high profits.
In its press release, the SEC claimed that Willner has utilized the services of an unnamed Bitcoin exchange to convert the funds from US dollars to Bitcoin to hide his profits. The proceeds of the exchange were transferred to another individual, who was not included in the case.
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."
Willner’s modus operandi
Based on the SEC lawsuit, Willner and his cohort have amassed at least $700,000 in profits from their alleged account take-over scam. In the investigation conducted by the SEC’s Cyber Unit, the account take-over scheme poses an increasingly major threat to retail investors.
According to the SEC’s Division of Enforcement Co-Director Stephanie Avakian, the crime is a major threat to retail investors, so the newly-formed Cyber Unit is focusing on it.
"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.”
The SEC’s Cyber Unit was introduced in September 2017 to focus on crimes involving digital currencies, as well as initial coin offerings (ICO) and distributed ledger technology, among others.