DOJ Sentences Eric Council Jr. to Prison for Hacking SEC's Social Media and Faking Bitcoin ETF Approval

The U.S. Department of Justice (DOJ) announced on May 16 that a resident of Huntsville, Alabama, has been sentenced to over a year behind bars for his involvement in a cyber intrusion targeting the Securities and Exchange Commission's (SEC) social media presence.

The U.S. Department of Justice (DOJ) has sentenced a resident of Huntsville, Alabama, to over a year behind bars for his role in a cyber intrusion that targeted the Securities and Exchange Commission's (SEC) social media presence and briefly sent crypto markets into overdrive.

Eric Council Jr., 26, received a 14-month prison sentence followed by three years of supervised release after pleading guilty to conspiracy charges related to identity theft and access device fraud.

As part of the sentence, U.S. District Judge R. David Proctor also ordered restitution to be paid to the victims of the cyber intrusion and access device fraud.

The case arose from a broader investigation by the FBI into a cybercrime group known for large-scale SIM-swapping operations and spearheading substantial financial fraud.

The DOJ said the actions by Council and his co-conspirators led to a momentary but significant spike in the price of bitcoin.

The hackers exploited the SEC’s platform to spread false financial information, which had immediate consequences on the cryptocurrency market.

The DOJ noted that the price of bitcoin rose by more than $1,000 following the post, which was quickly deleted by X. However, the post’s impact on the crypto market was evident as the price of BTC decreased by more than $2,000 following the correction from the post’s influence.

The actions by Council and his co-conspirators also had broader implications for the financial markets. The hackers' ability to impersonate the SEC and spread false information could have destabilized the market and eroded public trust in the financial system.

The case serves as a stark reminder of the importance of cybersecurity and the role that the DOJ plays in deterring and punishing cybercrime.

It also highlights the need for cooperation between law enforcement and private industry in combating cybercrime.

The SEC had no immediate comment on the case. However, the agency has previously warned investors about the dangers of cryptocurrency scams.

The agency also advised investors to be wary of any investment opportunities that seem too good to be true.

In January, the SEC approved the first spot bitcoin ETFs from several firms, including Invesco Inc, Galaxy Digital Holdings Ltd and WisdomTree Inc. The approvals came after years of deliberation by the agency and anticipation from investors.

The agency's Division of Investment Management had proposed in 2021 to reject applications for bitcoin ETFs, but the full commission voted 3-2 to approve the products.

The DOJ's investigation into the hacking of the SEC's social media presence is ongoing.

The agency is urging anyone with information about the case to contact the FBI.

"This case should serve as a deterrent to anyone who is considering committing cybercrime," said Darren Cox, Acting Assistant Director in Charge of the FBI's Criminal Investigative Division.

"The deliberate takeover of a federal agency's official communications platform was a calculated criminal act meant to deceive the public and manipulate financial markets."

"By spreading false information to influence the S.E.C. and the public, and attempting to steal I.D.'s and access devices, Eric, Jr. attempted to erode public trust and exploit the financial system."

"The FBI will continue to collaborate with our private sector partners and federal partners to identify and disrupt those who pose a threat to public safety and the integrity of our financial institutions."