Russian Hacker With Kremlin Ties Extradited to U.S. on Insider-Trading Charges

Mr. Klyushin, 41 years old, was charged alongside four other Russian nationals who remain at large. The alleged hackers ran a Russian information technology company that purported to offer cybersecurity defense services to protect from nation-state hackers. Between 2018 and 2020, prosecutors said, the defendants broke into the computer networks of two vendors that public companies in the U.S. use to file reports with the Securities and Exchange Commission.

Among the other four charged is

Ivan Ermakov,

a former member of Russia’s military intelligence agency, who was previously and separately charged with hacking crimes in 2018 in former special counsel

Robert Mueller’s

investigation into Russian interference in the 2016 U.S. presidential election. According to the 2018 indictment, Mr. Ermakov was one of a dozen Russian officials who hacked into Democratic Party computer networks and later leaked them online through various entities as part of an effort directed by Russian President

Vladimir Putin

to damage the candidacy of Democratic nominee

Hillary Clinton.

According to the indictment that led to Mr. Klyushin’s extradition, some of the four men accessed earnings reports in 2018 and 2019 from Capstead Mortgage Corp., Tesla, and

SS&C Technologies,

days or hours before they were publicly filed. The group traded in those companies’ shares, both buying those about to disclose positive results and selling short those about to disclose negative results, the indictment alleged. The traders distributed their trading across accounts they opened at banks and brokerages in Cyprus, Denmark, Portugal, Russia and the United States, prosecutors said.

In November 2019, Mr. Ermakov allegedly broke into the same network and viewed nonpublic earnings-related information of Roku, days before the streaming hub reported that it would reduce its profit forecasts. Mr. Klyushin shorted Roku shares, earning around $1 million, the indictment said.

The charging documents don’t indicate that any of the companies whose earnings reports were accessed were directly hacked.

“We, the FBI, and our other law enforcement partners will relentlessly pursue those who hack, steal and attempt to profit from inside information, wherever they may hide,” said the acting U.S. attorney in Boston, Nathaniel Mendell. A U.S. lawyer for Mr. Klyushin couldn’t immediately be located for comment.

Mr. Klyushin had “extensive ties to the office of the president of the Russian federation,” Mr. Mendell said during a press briefing, including that he worked closely with Mr. Ermakov. The website of Mr. Klyushin’s company also advertised that its services are used by the Russian government.

The Russian Embassy in Washington didn’t immediately respond to a request for comment.

Prosecutors have charged several foreign nationals with engaging in similar insider-trading schemes in recent years, but those defendants are largely believed to be overseas and aren’t in U.S. custody.

In 2019, for example, a Ukrainian man was charged with working with others to breach the corporate-filing system of the Securities and Exchange Commission and use early peeks at 157 earnings releases to make $4.1 million.

In 2016, prosecutors obtained the indictment of several Chinese traders who allegedly earned more than $4 million in illegal profits after they hacked into the computer systems of prominent U.S. law firms and stole nonpublic information on mergers and acquisitions.

In Swiss courts, Mr. Klyushin’s legal team argued that he was being wrongly targeted by the U.S. because of political reasons and because American authorities hoped Mr. Klyushin could provide them with valuable information about the Russian government, according to news-wire reports.

Russia in recent years has pursued what current and former U.S. law-enforcement and diplomatic officials have described as an aggressive campaign to prevent their citizens arrested on criminal hacking charges from being extradited to the U.S. The strategy includes spamming overseas courts with legal appeals and, in some cases, more coercive means, such as bribery, to pressure countries to not cooperate with U.S. extradition efforts, those officials have said.