'The "misappropriation theory" holds that a person commits fraud "in connection with" a securities transaction, and thereby violates ยง 10(b) and Rule 10b-5, when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information. ... Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of that information. In lieu of premising liability on a fiduciary relationship between company insider and purchaser or seller of the company's stock, the misappropriation theory premises liability on a fiduciary-turned-trader's deception of those who entrusted him with access to confidential information.'
The employees involved here broke the law by obtaining the information. However, if they had simply gone to a hedge fund without telling them where they worked, and said, "here are our predictions of these stocks, if you like the results, pay us and we'll give you more predictions," the hedge fund could have traded on it and that would not have been illegal for them to do because they had no knowledge of the actual source of the information.
The employees stealing the information would have still been liable. But had they simply accepted payment from the hedge fund in Bitcoin and not revealed their true identities to the hedge fund, they would have been much harder to find and prosecute.
"People have asked me if this is insider trading and, you know, sure it is? (If the allegations are true, I mean.) This is not "classical" insider trading -- trading or tipping by an insider at Chipotle or whatever -- but rather "misappropriation" insider trading..."
Possibly something to do with privileged information. Keep in mind that even things such as intent may get you on the wrong side of the line*
* example: you post a trade but you don't intend to execute it but instead hope to fool the market, then you cancel the trade and switch to other direction. forgot what that's called exactly
'The "misappropriation theory" holds that a person commits fraud "in connection with" a securities transaction, and thereby violates ยง 10(b) and Rule 10b-5, when he misappropriates confidential information for securities trading purposes, in breach of a duty owed to the source of the information. ... Under this theory, a fiduciary's undisclosed, self-serving use of a principal's information to purchase or sell securities, in breach of a duty of loyalty and confidentiality, defrauds the principal of the exclusive use of that information. In lieu of premising liability on a fiduciary relationship between company insider and purchaser or seller of the company's stock, the misappropriation theory premises liability on a fiduciary-turned-trader's deception of those who entrusted him with access to confidential information.'