2 Traders Guilty in Newswire Hacking Case

Wednesday, July 11, 2018 @ 11:07 AM gHale

A hedge fund manager and a securities trader are guilty of a $30 million attack on newswire companies.

Vitaly Korchevsky, 53, a former hedge fund manager from Pennsylvania, and Vladislav Khalupsky, 47, a securities trader living in New York and Ukraine, ended up convicted in a Brooklyn federal court Friday on charges of conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusion, conspiracy to commit money laundering, and securities fraud.

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They each face up to 20 years in prison.

The attack involved Ukraine-based hackers breaking into the systems of Marketwired, PR Newswire and Business Wire between February 2010 and August 2015, and stealing as many as 150,000 press releases. The hackers sent the stolen press releases containing nonpublic financial information to several traders who quickly monetized it, according to Department of Justice (DoJ) officials.

Korchevsky and Khalupsky are said to have traded based on nonpublic press releases issued by hundreds of companies, including Align Technology, CA Technologies, Caterpillar, HP, Home Depot, Panera Bread, and Verisign.

Korchevsky made more than $15 million over the course of the plan, while Khalupsky, who traded for the criminal network and received a percentage of the profits, made at least $500,000, law enforcement officials said.

“The defendants teamed up with cybercriminal co-conspirators to hack pre-distribution press releases and then traded in the stock market based on that stolen information, making massive profits as a result,” stated United States Attorney Richard P. Donoghue.

The conspirators used separate phones, computers and hotspots to conduct their illegal trading activity, and routinely deleted emails and/or destroyed hardware that contained evidence of their crimes, DoJ officials said. The conspirators also directed that payments received for the illegal profits they generated for the criminal network be made to offshore shell companies.

“Conspiring with hackers overseas, Korchevsky and Khalupsky worked swiftly to trade on stolen press releases, illegally profiting millions of dollars,” said FBI Assistant Director-in-Charge William F. Sweeney.

Korchevsky and Khalupsky were among nine people accused of making $30 million through the newswire hacking scheme. Three suspects are still at large, but all the others have been convicted or pleaded guilty.

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