The Securities and Exchange Commission (SEC) of the United
States announced on August 11 fraud charges against 32 people, among them two
are Ukrainian men, after finding their involvement in an alleged international
hacking and insider trading ring.
The SEC issued a press release informing that these people
took part in a scheme to profit from stolen nonpublic information about
corporate earnings announcements.
“Those charged include two Ukrainian men who allegedly
hacked into newswire services to obtain the information and 30 other defendants
in and outside the U.S. who allegedly traded on it, generating more than $100
million in illegal profits,” the press release read.
According to the press statement, the complaint against the
people was filed under seal on August 10 in U.S. District Court in Newark, N.J.
The crooks used proxy servers to mask their identities and
by posing as newswire service employees and customers. The two allegedly recruited traders with a
video showcasing their ability to steal the earnings information before its
public release.
“The complaint charges that in return for the information,
the traders sometimes paid the hackers a share of their profits, even going so
far as to give the hackers access to their brokerage accounts to monitor the
trading and ensure that they received the appropriate percentage of the
profits,” the statement read.
Similarly, it also charges that the traders sought to
conceal their illicit activity by establishing multiple accounts in a variety
of names, funneling money to the hackers as supposed payments for construction
and building equipment, and trading in products such as contracts for
difference (CFDs).
“This international scheme is unprecedented in terms of the
scope of the hacking, the number of traders, the number of securities traded
and profits generated,” Mary Jo White, Chairperson of the SEC, said in the
press release.
“These hackers and
traders are charged with reaping more than $100 million in illicit profits by
stealing nonpublic information and trading based on that information. That
deception ends today as we have exposed their fraudulent scheme and frozen
their assets,” she added.
The SEC charged that Ivan Turchynov and Oleksandr Ieremenko
created a secret web-based location to transmit the stolen data to traders in
Russia, Ukraine, Malta, Cyprus, France, and three U.S. states, Georgia, New
York, and Pennsylvania.
“This cyber hacking scheme is one of the most intricate and
sophisticated trading rings that we have ever seen, spanning the globe and
involving dozens of individuals and entities,” said Andrew Ceresney, Director
of the SEC’s Division of Enforcement.
“Our use of innovative analytical tools to find suspicious trading
patterns and expose misconduct demonstrates that no trading scheme is beyond
our ability to unwind.”