Ukrainian Hackers Made $100M from Insider Trading on Stolen Information

The US Securities and Exchange Commission (SEC) filed fraud charges against over thirty people for allegedly taking part in a scheme to profit from stolen insider information about corporate earnings announcements. The international cybercrime ring, composed of two Ukrainians hackers and dozens of traders around the world, broke into newswire services to obtain the information, generating more than $100 million in illegal profits.
“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,” said Securities and Exchange Commission Chair Mary Jo White. “That deception ends today as we have exposed their fraudulent scheme and frozen their assets.”
The SEC alleges that over a five-year period, Ivan Turchynov and Oleksandr Ieremenko spearheaded the criminal operations, using advanced techniques to hack into newswire services, such as Business Wire, Marketwired and PR Newswire, and stole hundreds of corporate earnings announcements before the newswires released them publicly. Turchynov and Ieremenko created a secret web-based location to transmit the stolen data to traders in Russia, Ukraine, Malta, Cyprus, France and the US.
Advanced Techniques
Turchynov and Ieremenko hid the intrusions by using 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. In return for the information, the traders 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 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).
At times, the hackers and traders had a very narrow window of opportunity to extract and use the allegedly hacked information. In one particularly dramatic instance on May 1, 2013, the hackers and traders allegedly moved in the 36-minute period between a newswire’s receipt and release of an announcement that a company was revising its earnings and revenue projections downward. According to the SEC’s complaint, ten minutes after the company sent the still-confidential release to the newswire, traders began selling short its stock and selling CFDs, realizing $511,000 in profits when the company’s stock price fell following the announcement.
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6 Comments on "Ukrainian Hackers Made $100M from Insider Trading on Stolen Information"
The robotic voice in that video is extremely annoying. Get a human voice to do this for you.
Text to speech video. Come on financemaganates, having an accent in english is not bad trait.
Do originals please.
we got you imminent scientist stephen hawking to read these and this is how you appreciate it?
Now seriously, this is a feature we are testing out and your feedback is very welcomed. We have noted it and evaluating the further use of the service.
I noticed the robotic voice myself and thought ‘why didn’t FM just do the voiceover themselves?’
This was bound to happen. Surprised it does not happen more often. Insider trading is a touchy subject, because it is often difficult to prove they were not simply speculating on good information. So were these people located in the US? Or only those who were physically located in the US or accts were us-based were affected? if they were trading CFDs, how would the SEC know or care for that matter?
What if they were trading single-stock futures or other futures products?
I’m more interested into how they got caught.
Should not be hard for an algorithm to notice people that only make winning trades, and only before news releases – that will get them flagged and the authorities will investigate until they can be sure they have the whole network exposed.
They should have kept their ration to 51% wins – 49% losses to appear to be just lucky…