SEC X Account Hack: Guilty Plea in Bitcoin ETF Post Incident

On Tuesday, February 11, 2025, the Securities and Exchange Commission (SEC) confirmed that its official X (formerly Twitter) account had been compromised, leading to a fake announcement about the approval of spot Bitcoin ETFs. The unauthorized tweet caused a brief but significant price rally in Bitcoin, leading to approximately $90 million in liquidations. The SEC swiftly denied the false announcement and confirmed that no approval had been given.

The SEC's investigation into the incident revealed that the hacker gained control of the account by obtaining the phone number associated with it through a third party. The hacker then used this information to reset the password and take over the account. The SEC confirmed that the account did not have two-factor authentication (2FA) enabled at the time of the compromise.

Following the incident, the SEC faced criticism from lawmakers, with several GOP representatives vowing to investigate the matter. The SEC has since announced that it will investigate the cause of the breach and determine appropriate steps to prevent future incidents.

The individual responsible for the hack, Eric Council Jr., was arrested in October 2024 and pleaded not guilty to the felony charge. However, in a proposed plea agreement, Council agreed to forfeit $50,000 he earned from the incident and plead guilty to one count of conspiracy to commit aggravated identity theft and access device fraud. The proposed forfeiture order was filed on February 9, 2025, and is awaiting approval from US District Judge Amy Berman Jackson.

The SEC's lack of 2FA on its X account contributed to the security breach, highlighting the importance of implementing strong security measures to protect against unauthorized access. The agency has since enabled 2FA on its account and is expected to take additional steps to prevent future incidents.

The immediate market impact of the fake Bitcoin ETF announcement was significant, with the price of Bitcoin surging from around $46,746 to $47,863 within minutes of the false announcement being posted. This price increase led to approximately $90 million in liquidations as investors rushed to capitalize on the perceived opportunity. However, once the SEC confirmed that the announcement was fake and had not approved any Bitcoin ETFs, the price of Bitcoin quickly fell back to around $45,633, and then rose to $46,173.

The incident serves as a reminder of the potential impact of false or misleading information on the crypto market and the importance of accurate and timely communication from regulatory bodies. As the SEC continues to investigate the matter, it is expected to take steps to improve its security measures and prevent future incidents.