A judge on Friday sentenced an Alabama man to 14 months in prison for his role in the January 2024 hack of the Securities and Exchange Commission’s X account, which was used to send out a tweet that briefly spiked the price of bitcoin by more than $1,000, the Justice Department said.
The man, Eric Council Jr., pleaded guilty three months ago in U.S. District Court in Washington, D.C., to conspiracy to commit aggravated identity theft and access device fraud in connection with helping others who took control of the SEC’s account.
The X account was used to falsely claim that the SEC had officially approved exchange-traded funds for bitcoin.
The cryptocurrency’s price rose after that tweet, but then fell by more than $2,000 after the SEC quickly regained control of the account and said the tweet was false.
Surveillance footage showing Eric Council Jr. in a Huntsville, Alabama, AT&T store posing as an employee of the U.S. Securities and Exchange Commission.
Courtesy: U.S. District Court, Washington, D.C.
Ironically, the SEC said the next day that it had approved rule changes that allowed the creation of bitcoin ETFs.
The 14-month sentence that Council received in D.C. federal court was 10 months less than what was requested by prosecutors, who in a sentencing memorandum this week said that a group that provides tools for hackers in February posted on X a video statement “purportedly made by the Defendant.”
In the video, the 26-old Huntsville resident Council “acknowledged his role in the hack and referenced his discussions with law enforcement and guilty plea as steps towards accountability, he blamed the SEC’s cybersecurity practices, claiming, ‘[t]he @SECGov Hack was an inside job’ and ‘the SEC still hasn’t taken full accountability for investor losses due to cyber security practices of a lonely 85- year-old with dementia,’ ” prosecutors wrote.
“Defendant ends the video with a message where he continued to diminish his and his conspirators’ culpability.
The animated video, depicting characters dancing, concludes by saying: “But at the end of the day, the only reason their financial regulatory agency got hacked was because of a college drop out that majored in Cyber Security and violently smoked a lot of weed.”
Council’s defense lawyer, Dwight Crawley, in a sentencing memo, requested a prison term of 12 months and a day for his client, noting that he has no prior criminal history.
“The defendant admitted to using marijuana daily prior to his arrest, but he has not had any drug or alcohol infractions since his release on pre-trial supervision,” Crawley wrote.
“According to the defendant, his marijuana use aided him with his mental health struggles.”
Crawley declined to comment on Council’s case when contacted by CNBC on Friday. The lawyer hung up when asked about the video cited by prosecutors.
Council’s role in the hack conspiracy involved executing a so-called SIM swap attack on a person whose phone number was linked to the SEC’s X account.
Council was tipped to the identity of that person by a member of the conspiracy and then used a portable ID car printer to print out that person’s driver’s license, court records state. He then used the ID at an AT&T store in Huntsville to get an employee there to reassign the victim’s cell phone number to a telephone controlled by Council, records said.
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After gaining access to the victim’s phone number, “Council’s co-conspirators then accessed the account and posted in the name of the SEC Chairman,” the Justice Department previously said.
At the time of the bogus tweet, the bitcoin market was awaiting news of a decision on bitcoin ETFs.
Council, who was known online by the handles “Ronin,” “Easymunny,” and “AGiantSchnauzer,” was paid in about $50,000 worth of bitcoin by co-conspirators for his role in the hack.
Prosecutors in their sentencing memo said that surveillance agents observed Council on June 12 trying to execute a SIM swap at an Apple store in Birmingham, Alabama.
On Jan. 18, “law enforcement executed a search warrant of Defendant’s automobile and the Alabama residence where he was living” and recovered a fake identification card in the name of victim [in the SEC hack] with Defendant’s image and a portable identification printer,” the memo said.
“Law enforcement’s search of Defendant’s laptop uncovered templates for fake identification cards and internet searches for ‘SECGOV hack,’ ‘telegram sim swap,’ ‘how can I know for sure if I am being investigated by the FBI’ and ‘how long does it take to delete telegram account,’ ” the memo said.
“Schemes of this nature threaten the health and integrity of our market system,” District of Columbia U.S. Attorney Jeanine Pirro said in a statement.
“SIM swap schemes threaten the financial security of average citizens, financial institutions, and government agencies,” Pirro said.
