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First Dark Web Insider Trading Case Shows Government Active In Policing Tech
In United States v. Trovias, in a first of its kind prosecution, the Southern District of New York (SDNY) brought an insider trading case against Apostolos Trovias for selling inside information on the Dark Web. Unsurprisingly, the Securities and Exchange Commission (SEC) also brought a civil regulatory action against Trovias for the same conduct. In a rare move, however, SDNY and SEC charged this same conduct under different insider trading statutes. This difference underscores the legal complexities involved when the origin of inside information in the digital world is unknown. It also highlights the desire of both agencies to be aggressive in applying insider trading laws to crimes involving modern technologies. Ultimately, these cases show that the government will be active in policing the use of technology for insider trading, including through messaging apps and social media.
The Allegations Against Trovias
According to SDNY's indictment, Trovias, who went by the alias "The Bull," used websites on the Dark Web and encrypted messaging services to sell inside business information about publicly traded companies that Trovias had misappropriated. The Dark Web refers to websites on the Internet that cannot be accessed through traditional search engines. To access the Dark Web, one simply downloads an anonymizing web browser.
The Indictment alleges, among other things, that Trovias sold tips based on inside information about public companies that could be purchased for a fee, often paid in Bitcoin. Trovias is also alleged to have sold inside information directly to purchasers using encrypted messaging and email services. The Indictment does not identify where or how Trovias obtained the alleged inside information.
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