Day trader accused of using BTC to hide fraud scheme profits

A Pennsylvania-based day trader is facing charges of fraud and market manipulation in connection with a scheme that allegedly involved transferring proceeds into BTC in order to conceal illegal payments.

The U.S. Securities and Exchange Commission (SEC) said Joseph P. Willner pocketed at least US$700,000 in “illicit profits.” In its lawsuit, the commission accused Willner of accessing the brokerage accounts of over 100 victims and made unauthorized trades to artificially affect the stock prices, then trade against them to gain high profits.

To cover his tracks, Willner allegedly transferred the proceeds to an unnamed digital currency exchange, which converted the funds from U.S. dollars to BTC, according to the SEC. The BTC were transferred to another person, who was not included in the case.

“Willner’s activities were detected despite his efforts to disguise his real identity while communicating with at least one other individual through online direct messaging applications using a pseudonym,” according to the SEC’s complaint.

The trader’s scheme was a violation of federal securities laws and related SEC rules, according to the commission. SEC wants Willner to return his “ill-gotten gains,” plus interest and penalties, along with a permanent injunction.

“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,” said Stephanie Avakian, co-director of the SEC’s Division of Enforcement.

The commission’s Cyber Unit, introduced in September, focuses on crimes that involve digital currencies, initial coin offerings (ICOs) and blockchain technologies, among others.

“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,” said Avakian.

The U.S. Attorney’s Office for the Eastern District of New York and the U.S. Department of Justice Criminal Division’s Fraud Section have already filed criminal charges against Willner.