SEC Press Release 2021-122
Washington D.C., — The Securities and Exchange Commission today charged Apostolos Trovias, a Greek national, with perpetrating a fraudulent scheme to sell what he called “insider trading tips” on the Dark Web. The Dark Web, which facilitates anonymity by obscuring users’ identities, allows users to purchase and sell illegal products and services, and in this case, insider trading tips.
According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, from at least December 2016 through early 2021, Trovias—operating under the pseudonym “TheBull”—engaged in a deceptive scheme to offer and sell so-called “insider trading tips” on Dark Web marketplaces to purchasers whom Trovias offered an unfair advantage for trading securities in the public markets. As alleged in the complaint, Trovias claimed that the information he was selling consisted of order-book data from a securities trading firm that was provided to Trovias by an employee of the firm. Trovias allegedly sold those “tips” through one-off sales, as well as weekly and monthly subscriptions. Trovias allegedly sold over 100 subscriptions to investors via the Dark Web over the course of the scheme. The complaint alleges that, in addition to order-book information, Trovias sold the pre-release earnings reports of publicly traded companies. The complaint further alleges that Trovias acknowledged to federal authorities that this information was “sensitive and more importantly illegal to use or share.”
“Trovias’s alleged conduct was an attempt to evade detection by operating in obscure online forums,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit. “As this case demonstrates, the SEC will continue to target misconduct wherever it occurs and regardless of perpetrators’ efforts to hide their tracks.”
The SEC’s complaint charges Trovias with violating the antifraud provisions of the federal securities laws. The complaint seeks injunctive relief, disgorgement, prejudgment interest and penalties against Trovias.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Trovias.
The SEC’s investigation was conducted by Jon Daniels and Morgan B. Ward Doran of the Cyber Unit, and supervised by John O. Enright and Ms. Littman. The SEC’s continuing litigation is being conducted by Victor Suthammanont and Mr. Daniels. The Commission appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Internal Revenue Service.
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Dark Web User Known As “The Bull” Charged In Insider Trading Scheme
Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal indictment and a criminal complaint charging APOSTOLOS TROVIAS, a/k/a “The Bull,” with securities fraud and money laundering in connection with his scheme to solicit and sell stock trading tips and pre-release earnings and deal information regarding public companies.
Manhattan U.S. Attorney Audrey Strauss said: “Today’s charges demonstrate our Office’s continuing commitment to stopping those who pursue and use inside information to gain an illegal edge in the stock market. As alleged, Apostolos Trovias attempted to hide his insider trading scheme behind anonymizing software, screennames, and bitcoin payments. The Indictment and Complaint unsealed today show that committing insider trading using new technologies still produces a decidedly traditional outcome: a criminal indictment.”
FBI Assistant Director William F. Sweeney Jr. said: “Behind the veil of the Dark Web, using encrypted messaging applications and emails, Trovias created a business model in which he sold—for profit—proprietary information from other companies, stock trading tips, pre-release earnings, and other inside information, as we allege. The FBI operates within the Dark Web too, and as Trovias learned today, we don’t stop enforcing the law just because you commit federal crimes from behind a router with your keyboard.”
According to the allegations in the Indictment and Complaint unsealed today in Manhattan federal court:[1]
Since at least in or about December 2016, APOSTOLOS TROVIAS, who identifies himself by the pseudonym “The Bull,” has used websites on the Dark Web and encrypted messaging services to solicit and sell confidential, non-public information about publicly traded companies (“Inside Information”) to enrich himself. TROVIAS’s scheme consisted of multiple related efforts to obtain and monetize confidential nonpublic business information, including (1) the sale of misappropriated stock tips based on confidential customer trading information; (2) the sale of pre-release earnings reports and deal information misappropriated from publicly-traded companies; and (3) the attempted creation of an online marketplace to connect, for a commission, individuals misappropriating Inside Information to individuals willing to pay for and trade on Inside Information.
For example, between in or about December 2016, when he registered for a Dark Web site known as AlphaBay Market, and in or about July 2017, when AlphaBay ceased operations, TROVIAS offered for sale and sold stock tips that were based on non-public inside information about certain securities issuers and which could be purchased individually, or as weekly or monthly subscriptions.
At various times between in or about June 2017 and February 2020, TROVIAS sold Inside Information directly to purchasers, using encrypted messaging and email services to communicate about the sale, rather than exclusively through the marketplace features of the Dark Web forums. For instance, TROVIAS offered for sale and did sell, among other confidential information belonging to various securities issuers, for approximately $5,000 in Bitcoin, at least one pre-release earnings report misappropriated from a publicly-traded company.
In or about 2020, TROVIAS also took steps to design and build a website to facilitate the purchase and sale of material, non-public information for use in stock trading (the “Inside Information Auction Site”). TROVIAS planned to use the Inside Information Auction Site to enrich himself by charging membership fees and commissions from individuals using the Inside Information Auction Site to engage in the unlawful trade of Inside Information.
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TROVIAS, 30, of Athens, Greece, is charged with one count of securities fraud and one count of money laundering. The securities fraud count carries a maximum penalty of 25 years in prison. The money laundering count carries a maximum penalty of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Ms. Strauss praised the outstanding work of the FBI. Ms. Strauss further thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action, and the Internal Revenue Service for their cooperation and assistance in this investigation.
The prosecution of this case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Matthew Podolsky and Andrew Thomas are in charge of the case.
The charges contained in the Indictment and Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and Complaint, and the description of the Indictment and Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation.
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Press Release Number: 21-171
