SEC Hacker Faces Two-Year Sentence After Bitcoin ETF Hoax

US prosecutors have recommended a two-year prison sentence for Eric Council Jr., who was involved in a hacking incident that targeted the Securities and Exchange Commission’s (SEC’s) social media account. The incident involved posting a fake message on the platform X, falsely announcing the approval of Bitcoin exchange-traded funds (ETFs).

In a filing submitted on May 12 to the US District Court for the District of Columbia, prosecutors argued that Council's actions warranted a prison sentence within the guidelines range. The fake announcement, which was posted in January 2024, caused significant market disruption over the approximately 24 hours before the SEC officially approved spot Bitcoin ETFs. This led to Council's subsequent arrest.

Prosecutors highlighted the sophistication of the fraud scheme, which included the use of fraudulently produced identification documents, misrepresentations at telecommunication stores, and the transmission of password reset codes to co-conspirators both within the US and abroad. They emphasized that such conduct deserved a significant penalty.

As of May 12, Council’s legal team had not filed a response to the sentencing recommendation. He is scheduled to appear before Judge Amy Berman Jackson on May 16. Council had previously pleaded guilty to his role in the hack, which involved a SIM swap attack that allowed the group to take control of the SEC’s X account and post the misleading message.

The fake announcement created a stir in the crypto industry, as many had been eagerly awaiting the SEC’s decision on the approval of spot Bitcoin investment vehicles. The price of Bitcoin surged by more than $1,000 following the false post, only to be refuted by then-SEC Chair Gary Gensler, who clarified that the claims were false.

The case is one of several that will be decided under new leadership appointed by President Donald Trump. The interim leadership for key districts, including the Eastern District of New York, the Southern District of New York, and the District of Columbia, has faced pushback from Democrats. The influence of the president’s appointments on the Justice Department’s pursuit of criminal cases involving digital assets remains unclear, given his ties to the industry and his own crypto holdings.