SEC Alleges Day Trader Used Bitcoin to Hide Fraud Profits

The SEC is suing a Philadelphia day trader for alleged fraud, claiming the individual used bitcoin to hide the profits they generated.

AccessTimeIconOct 31, 2017 at 7:30 p.m. UTC
Updated Sep 13, 2021 at 7:06 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Securities and Exchange Commission (SEC) is suing a Philadelphia day trader for alleged fraud, claiming they used bitcoin to hide their profits.

On Oct. 30, the SEC filed suit against Joseph Willner, accusing him of illegally taking over more than 100 brokerage accounts and using the victims' funds to artificially inflate stock prices that he would then trade against advantageously.

In order to hide the profits of those activities, the SEC said, Willner used an unnamed bitcoin exchange to convert the funds from U.S. dollars to bitcoin. Those proceeds were then transferred to another individual, who was not named in the lawsuit.

The agency said in a release:

"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."

According to the complaint, the two made at least $700,000 in profits through the alleged account take-over scheme. The SEC added that its investigation is still ongoing.

The case was investigated through the SEC's Cyber Unit, which was unveiled in September and is aimed in part at crimes involving cryptocurrencies.

"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.

Gavel image via Shutterstock

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.