Two defendants have been convicted for their involvement in an operation that generated about $30 million in illegal profits by trading on information from press releases stolen from major newswires, the Department of Justice announced last week.
Vitaly Korchevsky, a former hedge fund manager, and Vladislav Khalupsky, a securities trader, were convicted on July 6 in a federal court in Brooklyn, New York. Their conviction follows a four-week trial; each defendant could face a maximum prison sentence of 20 years.
The two were found guilty of conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusion, conspiracy to commit money laundering, and two counts of securities fraud. Both used stolen press releases from multiple newswires to trade on non-public information ahead of its release and earn millions of dollars, the DoJ reports.
Korchevsky and Khalupsky worked with cybercriminals to hack major newswire companies and lift press releases ahead of their distribution. Using the stolen data, which included non-public financial information, they traded in the stock market and generated $30M in illicit profit.
Evidence shows between February 2010 and August 2015, Ukranian hackers Ivan Turchynov and Oleksandr Ieremenko broke into the networks of Marketwired, PR Newswire, and Business Wire. The duo was among nine defendants charged in relation to this scheme in August 2015, when both Korchevsky and Khalupsky were also first charged for their involvement. So far all defendants have pleaded guilty or been convicted at trial, save for three who remain at large.
Turchynov and Ieremenko gained access to Marketwired in 2010 via SQL injection and used reverse shells to steal data. They broke into PR Newswire multiple times in 2010, 2011, and 2013, and breached Business Wire to steal data, brute-forcing the credentials of 15 employees.
The two moved through newswire networks to access more than 100,000 press releases about news on earnings, revenues, and other protected data throughout their five-year operation. Publicly traded companies whose announcements were involved included CA Technologies, Caterpillar Inc, Align Technology, Hewlett Packard, Home Depot, Panera Bread, and Verisign.
The threat actors spread their findings to a network of global traders using secure email exchanges and computer servers located overseas. Among them were Korchevsky and Khalupsky, who traded on the press releases before they were made public. There was a small window of time after the traders received stolen data and before the releases were published; investigators noticed spurts of trading activity just prior to their publication.
Most illegal funds were routed to the hackers. Korchevsky used press releases to trade on accounts that benefitted his criminal network and personal accounts, earning more than $15 million. Khalupsky mostly aimed to benefit his criminal network and made at least $500,000.
Investigators found the two attempted to hide their trading activity by using separate phones, computers, and hotspots, regularly deleting emails and destroying hardware containing evidence, and sending illegal profits to offshore shell companies.
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