Hacker Sentenced to Prison for Fake SEC Approval of Bitcoin ETFs That Shocked Markets

The U.S. Department of Justice (DOJ) has sentenced Eric Council Jr., 26, of Huntsville, Alabama, to 14 months in prison for his role in a sophisticated scheme to hijack the official X account of the U.S. Securities and Exchange Commission (SEC) to spread false information about the approval of Bitcoin ETFs. The move sent the cryptocurrency market into a brief state of chaos.

According to a statement from the DOJ on May 16, Council used a SIM swap attack – a technique used to steal access to a mobile phone – to take control of the SEC’s social media accounts. With this unauthorized access, he and his accomplices posted a fake post claiming that the SEC had officially approved Bitcoin ETFs – an event that the investor community had long been waiting for.

The fallout was almost immediate: Bitcoin spiked more than $1,000 in a matter of minutes, before plunging more than $2,000 after the news was confirmed to be fake. The wild swings reflected the influence of official sources and the market’s heightened sensitivity to developments related to Bitcoin ETFs.

The DOJ said Council used a fake identity to carry out the attack and received payment in Bitcoin for its role. The timing of the spoofing, on January 10, 2024, coincided with the SEC’s official approval of a slew of real Bitcoin ETFs – making the fake news all the more likely to mislead the public.

Acting Assistant Director of the FBI’s Criminal Investigation Division Darren Cox said:

“The intentional hijacking of a federal agency’s communications platform is a serious crime, with a clear intent to manipulate markets and deceive the public.”

The incident not only caused short-term losses to investors, but also raised cybersecurity concerns for financial regulators and had long-term effects on market confidence. The Justice Department said it would continue to crack down on and severely punish acts of intentional financial manipulation through technology.