Bitcoin Price Manipulated by Fake SEC ETF Approval Post

A federal court has handed down a 14-month prison sentence and three years of supervised release to an individual for his role in a scheme that involved posting a fake Bitcoin ETF approval announcement on the hacked SEC social media account. The incident took place on January 24, 2024, and involved a SIM swap attack that compromised the SEC’s official X account, resulting in a brief but significant spike in Bitcoin prices. Eric Council Jr., a 26-year-old from Huntsville, Alabama, pleaded guilty in February to conspiracy charges involving identity theft and access device fraud.

The fraudulent announcement was the result of a meticulously planned operation. Council executed a SIM swap, gaining access to a phone number linked to the SEC’s X account. Using a fake ID created with stolen information, he impersonated the victim tied to that phone number. Once access was secured, his co-conspirators used the account to publish a false post claiming the SEC had approved Bitcoin ETF listings. This post led to an immediate surge in Bitcoin’s price, rising by over $1,000 within minutes. However, the SEC quickly corrected the misinformation, and Bitcoin dropped by more than $2,000 shortly after. Council received Bitcoin payments from his co-conspirators as compensation for his role in the scheme.

The case highlights the growing cyber risks in financial markets and the need for robust security measures. Authorities emphasized that this coordinated fraud aimed to manipulate markets using fake digital asset news. The investigation, led by the FBI and the SEC’s Office of Inspector General, underscored the serious consequences of tampering with financial communications. The sentence serves as a warning to potential offenders and a reminder of the importance of protecting public trust in financial information sources.

The scheme relied on a Subscriber Identity Module (SIM) swap, a tactic used to hijack phone numbers. Council obtained personal data from co-conspirators, used an ID printer to make a forged identification card, and successfully posed as the phone number’s rightful owner. This tactic granted him control of the victim’s number, which was tied to the SEC’s social media account. The group bypassed two-factor authentication tied to the SEC’s X account, allowing them to impersonate the SEC Chairman and post a fake Bitcoin ETF approval notice. The coordinated timing and knowledge of crypto markets suggest a calculated attempt to profit from rapid price shifts in Bitcoin.

Officials noted that such schemes threaten public trust in financial information sources and pose serious cybersecurity risks. Law enforcement agencies involved stressed that the case highlights how advanced fraud methods are used to exploit digital platforms. The sentence aims to deter similar crimes targeting public institutions and financial systems.

The Department of Justice prosecuted the case through its Computer Crime and Intellectual Property Section and Fraud Section. Prosecutors charged Council with conspiracy to commit aggravated identity theft and access device fraud. Trial attorneys from the Justice Department and Assistant U.S. Attorney Kevin Rosenberg led the case in the District of Columbia. The SEC and FBI emphasized their commitment to securing government accounts and protecting the integrity of financial information. Both agencies confirmed their ongoing cooperation to prevent further breaches and hold offenders accountable. The case sets a precedent for prosecuting digital asset manipulation involving public agencies.