The FBI has just arrested the man it says hacked the Securities and Exchange Commission’s X account in January to falsely claim that the agency had authorized the listing and trading of bitcoin ETFs. The fake announcement was quickly debunked by the agency but not before it caused the price of bitcoin to spike and then fall in a short amount of time.
In the indictment, U.S. attorney Matthew Graves revealed how Eric Council Jr., a 25-year-old from Alabama, allegedly worked with a group of co-conspirators to get access to the SEC’s X account and then tried to cover his tracks. Notably, the FBI said that Council purportedly conducted an Internet search asking, “how can I know for sure if I am being investigated by the FBI” after he carried out the scheme, which is... not a good look.
The fake post. It was the post heard round the crypto world. Back in January, bitcoin investors received much-awaited news in a post from the SEC on X:
“Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges,” the post read. It included a photo of SEC chair Gary Gensler, making it appear as if the message was endorsed by him. “The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”
For many bitcoin enthusiasts, the post was fantastic news. It meant that investors could now invest in bitcoin via ETFs, or exchange traded funds, which allow individuals to invest in an asset without having to directly buy it. EFTs are similar to mutual funds and are traded in stock market exchanges. Many believed the decision would bring bitcoin to the mainstream.
Unfortunately, it wasn’t true. The SEC had been hacked, and the real Gensler quickly pointed out it was a lie on his own X account. “The SEC has not approved the listing and trading of spot bitcoin exchange-traded products,” Gensler said.
The scheme. While the hacking of the SEC’s account made headlines, details about the people who carried out the scheme have been scarce until now.
According to the indictment, Council and others allegedly carried out the hack using a tactic called SIM-swapping, which is what happens when bad actors trick phone companies into connecting your phone number to a SIM card they possess. Once this is done, all calls and texts that are meant for your phone number appear on another device.
Council purportedly received personal identifiable information about a person with access to the SEC’s X account and made a fake ID card with the information. He then went to an AT&T store and, claiming he was an FBI employee, said he needed a new SIM card because he broke his phone, which he received. Council proceeded to go to an Apple Store to buy an iPhone to use with the SIM card.
After introducing the SIM card into the phone, Council received the two-factory security reset codes that allowed him to access the SEC’s X account. He shared the codes with his co-conspirators, who went on to post the tweet, and then proceeded to return the iPhone. The 25-year-old received payment in bitcoin for the scheme, the FBI said.
The aftermath. The fake SEC post caused the price of the cryptocurrency to rise by more than $1,000 per bitcoin, though the high didn’t last long. After the agency regained control of its X account, it issued a statement confirming that the announcement was false and the result of a security breach, prompting the price of bitcoin to fall by $2,000.
Mounting worry. The FBI claims that Council proceeded to carry out a series of potentially incriminating Internet searches after carrying out his SIM-swapping scheme. They included the following:
- “SECGOV hack”
- “telegram sim swap”
- “how can I know for sure if am being investigated by the FBI”
- “What are the signs that you are under investigation by law enforcement or the FBI even if you have not been contacted by them”
- “federal identity theft statute”
- “how long does it take to delete telegram account”
The charge. The Justice Department has charged Council with conspiracy to commit aggravated identity theft and access device fraud. In its news release, the FBI didn’t provide any additional information on the identities of Council’s alleged co-conspirators.
Overall, it seems like that the perpetrators wanted the SEC to approve bitcoin ETFs so much that they hacked the agency to do it. But all they had to do was wait just a little longer. One day after the hack of its X account, the agency finally did approve bitcoin ETFs—officially. However, it wasn't a full-throated endorsement.
“Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto,” Gensler, the SEC chairman, said.
Images | Zach Copley (edited) | Daniel Foster
View 0 comments