SEC Account Hacker Sentenced for Cyber Fraud in Bitcoin ETF Scam
By: Eliza Bennet
In a significant development in the realm of cybersecurity, Eric Council Jr., a 26-year-old from Huntsville, Alabama, has been sentenced to 14 months imprisonment for his involvement in the hacking of the U.S. Securities and Exchange Commission’s (SEC) X account. The incident, which occurred on January 9, 2024, involved the dissemination of false news regarding the approval of a Bitcoin exchange-traded fund (ETF), a move that had significant repercussions for the cryptocurrency market.
Council Jr., in collaboration with others, managed to manipulate market sentiment by posting a fraudulent message from the SEC’s legitimate social media account. The message falsely indicated the approval of a Bitcoin ETF, leading to a brief surge in Bitcoin’s price. The price of each Bitcoin soared by over $1,000 but plummeted by more than $2,000 once the hack was exposed and dismissed by SEC Chair Gary Gensler. This misinformation caused significant market volatility, resulting in approximately $50 billion being wiped off Bitcoin's market capitalization and $220 million in liquidations.
The Department of Justice revealed that Council Jr. utilized sophisticated techniques including a Subscriber Identity Module (SIM) swap and the creation of fake IDs to execute the hack. His role involved gaining unauthorized access to individuals' phone numbers, which he used to post the deceptive information. Council Jr. received payments in Bitcoin for his part in the fraud, further intertwining the incident with the cryptocurrency world.
This case underscores the vulnerabilities present in digital financial markets and the potential for misinformation to cause dramatic market fluctuations. Darren Cox, Acting Assistant Director of the FBI’s Criminal Investigative Division, labeled the act as a calculated attempt to deceive the public and destabilize financial markets. As cybersecurity threats continue to evolve, regulatory bodies and financial institutions are urged to fortify their defenses against such sophisticated fraudulent schemes.
Meanwhile, another noteworthy development in the crypto industry is the registration of tZero Group Inc. as a fully-fledged U.S. broker dealer under SEC oversight. This move follows the precedent set by Prometheum Inc., positioning tZero in a pioneering role in the intersection of traditional finance and cryptocurrency. The regulatory green light for tZero reflects a cautiously optimistic approach by authorities towards integrating crypto firms within the regulatory framework, potentially paving the way for more mainstream adoption and integration of digital assets.
