Alabama Man Pleads Guilty to Identity Theft and Access Device Fraud in Bitcoin ETF Hack

Eric Council Jr. used his unauthorized access to the SEC's X account to post a false statement claiming the agency had approved Bitcoin exchange-traded funds.

An Alabama man who hijacked the Twitter account of the US Securities and Exchange Commission (SEC) to pump Bitcoin has pleaded guilty to identity theft and access device fraud.

Eric Council Jr., along with his co-conspirators, used their unauthorized access to the SEC’s Twitter account to post a false statement claiming the agency had approved Bitcoin exchange-traded funds.

Bitcoin’s price quickly soared before plummeting back down after the SEC’s then-chairman Gary Gensler used his personal account to state the post was false.

The cryptocurrency industry has long clamored for the ability to launch Bitcoin ETFs, which essentially allow everyday traders to invest in crypto without needing to hold the currency themselves or buy it through a dedicated exchange.

It is considered safer because investors in an ETF do not have to hold the currency themselves or risk losing their funds in all too common hacks.

The SEC did approve Bitcoin ETFs one day after the hack, curiously.

According to the Justice Department, Council accessed the SEC’s account using an attack called SIM swapping, in which a perpetrator uses social engineering to trick a phone carrier’s customer service representatives into transferring an individual’s phone number to a new device.

Basically, they call into a support line and use pieces of personal information about a victim they have gathered online to convince the representative they are the person they are targeting.

Once perpetrators take the number and can begin receiving text messages, they are able to reset the passwords of accounts on services like Twitter. It is not really a “hack” in the traditional sense that they are not finding flaws in software but rather exploiting human trust.

SIM swapping has become a major problem in recent years, infamously causing a major 2020 disruption of Twitter that saw infiltrators take over the accounts of major figures like President Obama.

Similarly, in that case, the perpetrators were running a cryptocurrency scam. SIM swaps are a favored method to hijack cryptocurrency wallets, which are not protected by FDIC insurance.

Once cryptocurrency funds are stolen, they are incredibly difficult (but not impossible) to claw back, making them an ideal vector for fraud.

A lot of international fraud is conducted using cryptocurrencies like Bitcoin and Tether because they do not touch the traditional banking system, which has many more provisions in place to monitor for money laundering and other suspicious activity. President Trump’s support of crypto and evisceration of the Consumer Financial Protection Bureau is not likely to improve the situation.

Unfortunately for individuals like Council, all Bitcoin transactions are logged on a blockchain for anyone to see, leaving a trail of breadcrumbs for investigators to find. If he did make out with a lot of crypto, it would be hard to keep it hidden forever.

Council allegedly did not post the message himself to the SEC’s Twitter account, but conducted the SIM swap and left the rest of the work to his co-conspirators who compensated Council in the form of, of course, Bitcoin.

The price of the cryptocurrency rose by $1,000 after the fake announcement, according to the Justice Department, and fell by $2,000 after the SEC issued a correction.

That could have led to a big windfall depending on how much Bitcoin the perpetrators held at the time. Council faces up to five years in prison when he is sentenced.

The Justice Department in its press release does not say whether or not it has identified the co-conspirators, but the investigation remains ongoing.