US prosecutors recommend 2 years for SEC hacker

The US government seeks a two-year prison sentence for Eric Council Jr., who played a key role in a scheme to manipulate the cryptocurrency market. Council pleaded guilty to participating in a group that gained unauthorized access to the Securities and Exchange Commission’s (SEC) X account via a SIM swap attack. This breach allowed them to post a fraudulent announcement claiming the SEC had approved spot Bitcoin exchange-traded funds (ETFs).

This fake announcement, published in January 2024, caused a significant, albeit short-lived, surge in Bitcoin’s price. The deception was quickly uncovered by the SEC, which issued a correction the following day, officially approving spot Bitcoin ETFs. The government’s sentencing recommendation, filed on May 12th in the US District Court for the District of Columbia, emphasizes the seriousness of Council’s actions. Prosecutors highlight the sophisticated nature of the fraud, involving forged identification documents, misrepresentations, and the compromise of online accounts. They argue that Council’s actions warrant a substantial prison sentence.

Council’s legal team has yet to respond to the government’s recommendation. A hearing before Judge Amy Berman Jackson is scheduled for May 16th. The case underscores the vulnerability of even established institutions to cyberattacks and the potential for significant market manipulation through social media.

The timing of this case coincides with a broader shift in the US Department of Justice (DOJ). President Donald Trump’s appointments of interim US Attorneys, following resistance from Democrats, have created uncertainty regarding the DOJ’s approach to cryptocurrency-related criminal cases. This uncertainty is amplified by Trump’s known connections to and holdings within the cryptocurrency industry.

The Council case is not isolated. The recent 12-year sentence handed down to former Celsius CEO Alex Mashinsky in the Southern District of New York highlights the increasingly stringent approach to prosecuting cryptocurrency-related crimes. The outcome of Council’s sentencing will offer further insight into the judicial system’s response to this evolving area of criminal activity.