If you happen to read every indictment that comes flowing out of the SEC (as we at Dealbreaker do) you begin to wonder why it is that so many seeming professionals with active careers and growing families choose to engage in such shit-headed two-bit scams. Surely any intelligent investor knows that insider trading in your mother's name or trading on your own research reports would be detected by an SEC committed (at least until recently) to rooting out “broken windows” offenses.
But still they do it. And the best answer we've come across as to why comes from one Individual A, an accomplice in an alleged scheme to take over unwitting investors' brokerage accounts, conduct off-hours trading on small-cap low-vol stocks, and then profit by having someone take the other side of the trades. At one point during the course of the scam, I.A.'s alleged partner-in-crime – Philadelphia day trader Joseph Willner – asked if I.A. would be down to do some trading that day. The response, per the SEC:
Legal trading too hard.
There it is. A theory of securities law criminality so concise that it doesn't even need a verb. It's too difficult to profitably play the public markets, especially when there is, sitting across from you, an entire industry built around eating your lunch. But knowing that fact doesn't make day trading any less irresistible.
So eventually some people resort to less legit means to make a buck – in this case somehow commandeering the accounts of unsuspecting victims to move the prices of thinly traded stocks and then profiting from the dislocations with another account. (Individual A, who controlled the dummy accounts, allegedly got a cut of the profits Willner made in his own account. I.A.: "u remember deal ... i can do that [expletive] half half profit.")
Perhaps the more interesting facet in the story, however, is that bitcoin still isn't a foolproof avenue for money laundering:
Willner agreed to the profit sharing arrangement with Individual A. In order to mask his payments to Individual A, Willner transferred proceeds of profitable trades to a digital currency company that converts United States dollars to the cryptocurrency known as bitcoin, and then transmitted the bitcoins to Individual A.
There were other ways the SEC says Willner left his tracks uncovered – by failing to mask his home IP address, for instance – but at the very least we can affirm, again, that sending illicit payments in bitcoin does not magically erase the alleged crimes that necessitated the bitcoin in the first place.