Alabama Man Pleads Guilty to Hijacking SEC X Account to Pump Bitcoin

An Alabama man, Eric Council Jr., has pleaded guilty to identity theft and access device fraud for hijacking the X account of the US Securities and Exchange Commission (SEC) to pump Bitcoin. Council, along with his co-conspirators, used their unauthorized access to the SEC’s X account to post a false statement claiming the agency had approved Bitcoin exchange-traded funds (ETFs). As a result, Bitcoin’s price soared before plummeting back down after the SEC’s then-chairman Gary Gensler used his personal account to state the post was false.

The Impact on the Cryptocurrency Industry

The cryptocurrency industry has long advocated for the ability to launch Bitcoin ETFs, which would allow everyday traders to invest in crypto without needing to hold the currency themselves or buy it through a dedicated exchange. The SEC’s approval of Bitcoin ETFs has been a significant development in the industry, and the timing of the approval has raised questions.

The Method Used by the Perpetrators

The perpetrators used a social engineering attack called SIM swapping to access the SEC’s account. This involves tricking a phone carrier’s customer service representatives into transferring an individual’s phone number to a new device. Once the perpetrators take the number, they can begin receiving text messages and reset the passwords of accounts on services like X.

The Problem of SIM Swapping

SIM swapping has become a major problem in recent years, causing disruptions to major services like Twitter. The perpetrators exploit human trust by using pieces of personal information about a victim to convince the representative they are the person they are targeting. SIM swaps are a favored method to hijack cryptocurrency wallets, which are not protected by FDIC insurance. This makes them an ideal vector for fraud.

The Rise of International Cryptocurrency 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 evisitation of the Consumer Financial Protection Bureau is not likely to improve the situation.

The Investigation and Consequences

Council allegedly did not post the message himself to the SEC’s X account, but conducted the SIM swap and left the rest of the work to his co-conspirators, who compensated Council in the form of 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. Council faces up to five years in prison when he is sentenced.

The Ongoing Investigation

The Justice Department has not identified the co-conspirators, but the investigation remains ongoing. The logging of all Bitcoin transactions on a blockchain for anyone to see leaves a trail of breadcrumbs for investigators to find, making it difficult for perpetrators to keep their ill-gotten gains hidden forever.