US SEC Lawsuit Charges Bitcoin Laundering In Stock Pump and Dump

Blockchain, Investing, News, Regulation | November 1, 2017 By:

The US Securities and Exchange Commission (SEC) is suing a day trader for alleged fraud, claiming he used bitcoin to hide profits from his stock exchange pump and dump scheme.

The SEC filed charges on Monday against Joseph Willner of Philadelphia. He is accused of illegally taking over more than 100 brokerage accounts and using the funds to artificially inflate stock prices. He would then trade against those funds.

In an attempt to launder his profits, Willner used a not-identified exchange to convert funds from US dollars into bitcoin, transferring the coins to another individual who was not named in the suit. The two allegedly made more than $700,000 in profits, and the investigation continues into their activities.

“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 U.S. dollars to bitcoin and then transmitted the bitcoins as payment.”

The SEC’s new Cyber Unit was credited with the bust. “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,” Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, said in a statement.

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