Insider Trading on The Dark Web

Apostolos Trovias was recently arrested in Peru and charged by the SEC with perpetrating a fraudulent scheme to sell what he called "insider trading tips" on the Dark Web.

According to the complaint, Trovias, using the online avatar "TheBull" engaged in a deceptive scheme to sell "insider trading tips" on Dark Web marketplaces like Alpha Bay. The Bull claimed that the information he was selling consisted of order-book data from a securities trading firm that was provided to him by an employee of that firm. The complaint states that he acknowledged that this information was “sensitive and more importantly illegal to use or share”.


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Transcript

I have a good story today, the story of Apostolos Trovias, a Greek man, who was arrested in Peru and charged by the SEC with perpetrating a fraudulent scheme (of all things) to sell what he called "insider trading tips" on the Dark Web. 

I was hoping to put some affiliate links to the websites he used in the description below to try and make a bit of affiliate marketing money, but it seems thatAlpha Bay the website he used was shut down around four years ago, and the feds are still pretty busy arresting and charging the people who used it. 

According to the complaint, Trovias, using the online avatar "TheBull" engaged in a deceptive scheme to sell "insider trading tips" on Dark Web marketplaces. The Bull claimed that the information he was selling consisted of order-book data from a securities trading firm that was provided to him by an employee of that firm. The complaint states that he acknowledged that this information was “sensitive and more importantly illegal to use or share”.

You could buy these "tips" either one by one, or by signing up for a weekly or monthly service.  How 2020’s is it that you can buy illegal tips as a subscription service.  Everyone loves recurring revenue streams, even criminals. 

I know, you are all wondering what these insider tips cost.  Well, one illegal tip is $29.95, the weekly plan is $99.95 and the monthly plan was $299.  I like that he didn’t price his illegal tips at round numbers.  I’m not sure if those prices include taxes or not – in fact I’m not really sure how taxes work on the dark web. If you have purchased illegal goods or services on the dark web and know about the tax implications, let me know in the comments section below.  

Anyhow, “The Bull” is accused of selling over 100 subscriptions. He sold both order-book information and the pre-release earnings reports of publicly traded companies. Now, I’m sure that many of you are thinking that this is a great idea. If you have illegal insider information, it’s probably a good guess that the pickled shark collector’s phone is tapped by the FBI, so why not sell it on the dark web? Of course, you only have to read a few stories like this to realize that the dark web’s main customer base is undercover federal agents.  If you think about it for a minute or so, you’ll realize that this dark web stuff is too complicated for criminals.  Let’s be serious the entire dark web is most likely a copy of eBay where the eBay logo has been swapped for a skull and crossbones hosted on a server in the basement of the pentagon.

So, The Bull’s customers included at least one IRS agent and an FBI agent working undercover. I knew it, an IRS agent – so I guess you do have to charge sales tax on the dark web.

Anyhow, here is a screen grab of his listing from alpha bay, which is included in the complaint.  I’ll note that the image he used in his advert is of a pair of dice, which possibly doesn’t give customers a lot of confidence in the accuracy of his insider tips – you are kinda hoping that if you spend 29.99 plus tax on illegal information that it won’t be a roll of the dice, but who am I to coach him on marketing. If there’s one thing I’ve learned on YouTube is that a good thumbnail matters.

The complaint says that he sold 39 individual tips, three weekly tip packages and three monthly packages.  I summed that up and that comes to around $2370 worth of insider information, plus taxes of course.  Gotta pay your dark web taxes.

Anyhow, The IRS agent signed up for the monthly plan and started receiving emails like the one you see on screen right now (that was included in the complaint). They gave the ticker symbol of the stock, whether the trade should be a long position or short position, and offered a confidence level for the tip ranging from 0 (for low expected returns) to 10 (high expected returns). 

The complaint says that in 2017 The Bull gave the IRS agent pre-release earnings information on at least two companies. The information apparently came from quarterly earnings reports for Illumina and Analogic, although the documents indicate Trovias mixed up some of the data on one of the reports.

This is the thing, you pay a guy 30 bucks for inside information, and then he goes and mixes it all up.  I wonder what the return policy is like on the dark web… It is probably like ali express…

Anyhow, it looks like he actually did have inside information, as he gave the right earnings number to the feds for Illumina, but in the case of Analogic – it looks like he had his hands on the report, but he told them that the revenues figure was $538.083 million but that was actually the total assets line item in their earnings report.  I mean how annoying! thirty bucks (plus tax), and this guy can’t even read the accounts.  As Neil Young once said about buying illegal goods online “You pay for this, but they give you that”

The complaint says that some of the inside tips in the daily emails were either false or misleading, but it turns out that that doesn’t matter to the Feds. If he was an actual office clerk and was really selling “inside trading tips,” he was committing insider trading – which is securities fraud. Now if he was just pretending to do that to make $30 on the dark web, he was committing general securities fraud. It turns out that fake insider trading is essentially the same crime as real insider trading, both are securities fraud and both violate the same laws, so the Feds don’t even have to decide which he was doing in order to charge him.

If he sold real stolen inside information, he was committing securities fraud against the owners of that information, while if he sold fake inside information, he was committing securities fraud against the unfortunate dark web criminals who bought it.

As late as 2020, the feds claim that The Bull was trying to build his own dark web site, possibly because the marketplaces he used kept getting shut down. The SEC and DOJ documents don’t mention taking “the bull” into custody but a May 27th extradition request can be found online which shows that he was arrested in Peru. The Department of Justice has charged him with one count of securities fraud which carries a maximum penalty of 25 years in jail, as well as one count of money laundering with a maximum penalty of 20 years in jail. It seems the IRS guy didn’t even get him for taxes…

I don’t really know anything about dark web taxes…

Anyhow, like and subscribe, and I’ll see you next week, bye.