British hackers who stole accounts belonging to celebrities like Elon Musk have been arrested, and a court has ordered them to repay £4 million in cryptocurrency.

In 2020, a massive hacking incident occurred on Twitter, where numerous celebrity accounts were stolen and cryptocurrency was stolen, shocking the global tech and political circles. That year, the platform, then known as Twitter , suddenly saw a flood of bizarre messages impersonating celebrities. From former US President Barack Obama to Tesla CEO Elon Musk, and even official accounts of companies like Apple and Uber, all simultaneously posted messages inviting followers to transfer Bitcoin for double the return—a seemingly absurd scheme that quickly attracted thousands of users to send money. The mastermind behind this scheme was Joseph James O'Connor, a 26-year-old from Liverpool, England. He has since been arrested and imprisoned, and a British court has ordered him to pay approximately £4 million worth of Bitcoin to the victims.

Obtain employee X's credentials and steal Bitcoin using social engineering techniques.

O'Connor operated online under the name PlugwalkJoe. He and a group of young accomplices used social engineering techniques to successfully steal login credentials from multiple Twitter employees. After gaining access to the backend, they were able to access a highly restricted control panel on the X platform, allowing them to directly reset celebrity account passwords and send tweets. In just two days, the hackers controlled over 130 accounts, 45 of which were used to post fraudulent messages. At the time, over 350 million users worldwide may have seen these posts, many of whom mistakenly believed the celebrities were promoting a charitable giveback program and fell into the trap.

Using online games to invite friends to commit fraud

During his Twitter-based crimes, Joseph James O'Connor made 426 transfers to a hacker-designated wallet, accumulating over 12.8 bitcoins. At the time, this was worth approximately $110,000; today, it's worth over $1.2 million. However, US investigators, after tracing O'Connor's assets, discovered that the hacker's profits extended far beyond this celebrity scam. He formed a hacking group with other teenagers after meeting in the online game "Call of Duty," continuously launching attacks on multiple targets, both extorting and stealing crypto assets. The UK Crown Prosecution Service stated that the investigation team traced further illicit gains to his e-wallet, seizing a total of 42 bitcoins and other digital currencies, worth approximately £4.1 million, or about $5.4 million.

After the crime, O'Connor fled to Spain, where his mother lived, but Spanish police arrested him in 2021. The Spanish Supreme Court subsequently ruled that the U.S. Department of Justice had the best standing to try the case because the victim and key evidence were all in the United States, and O'Connor was extradited to the United States. In 2023, he pleaded guilty in a U.S. court to charges including computer hacking, wire fraud, and extortion, and was sentenced to five years in prison.

The court ruled to forfeit £4 million worth of cryptocurrency as compensation.

Although O'Connor did not face criminal trial in the UK, the Crown Prosecution Service has filed a civil suit to recover his crypto assets. Prosecutor Adrian Foster emphasized that the purpose of the justice system is not only punishment, but also preventing the profiting from crime and restoring the victims' losses. He stated that even without a criminal conviction in the UK, the authorities still have an obligation to ensure that hackers cannot access illicit gains. Last week, the court formally determined that O'Connor's assets were worth approximately £4.1 million, all of which will be forfeited to compensate the victims.

This incident not only exposed security vulnerabilities within large social media platforms but also highlighted the threat that social engineering poses to internal corporate management. The hackers did not breach technical defenses but instead exploited human weaknesses, causing employees to mistakenly grant unauthorized access, ultimately leading to one of the platform's most serious security disasters. Twitter was forced to urgently freeze multiple accounts to prevent high-risk users from being manipulated again. Subsequent internal reviews indicated that overly centralized backend access control, insufficient employee training, and inadequate multi-factor authentication measures allowed attackers to easily gain access.

This case has prompted major global technology companies to strengthen access control for internal personnel and re-examine their ability to defend against social engineering attacks.

In his latest lengthy article, " Snow Forecast ," BitMEX co-founder Arthur Hayes points out that since April, ETF inflows and Depository Amounts (DATs) supporting Bitcoin have cooled significantly, while dollar liquidity has tightened, forming the main reason for the current decline in the crypto market. He anticipates that risk assets will face a deeper correction in the short term, and the market will only truly return to a bullish trend after the US government and the Federal Reserve restart printing money.

Key analogy: The market is like the weather, and Bitcoin serves as a global liquidity barometer.

Hayes used the Hokkaido ski season as an analogy to describe how investors often have to decide when to enter the market when the signals are incomplete.

He pointed out that Bitcoin's price reflects "market expectations for future fiat currency supply." When political signals lean towards easing , BTC reacts in advance; conversely, it does not.

However, the conflicting signals from the Trump administration and US fiscal policy are making it more difficult for the market to interpret the direction of liquidity.

Why did Bitcoin fall? Slower inflows into ETFs and DAT, coupled with tightening dollar liquidity, are the main reasons.

Hayes also explained why Bitcoin rose between April and October despite weakening dollar liquidity indicators, and the reasons for its weakness and decline in the second half of the year.

ETF basis trading inflates buying volume

First, large institutions buy Bitcoin spot ETFs such as IBIT and short CME futures to engage in basis trading, which is not a fundamental buy order.

• The basis rose, leading to a large influx of funds into ETFs. Retail investors mistakenly believed that institutional interest in BTC was surging and followed suit by buying.

• A decline in the basis leads to a collective withdrawal of arbitrage funds, resulting in a large outflow of funds from ETFs. Retail investors then follow suit, selling off their holdings and driving down market prices.

Basis trading, a common arbitrage strategy used by hedge funds, profits by manipulating the slight price difference between spot and futures government bonds, and amplifies returns through high leverage.

( Bitcoin ETF continues to see net inflows but hasn't risen? CME short arbitrage hits a new high, but these aren't people buying coins (basis trading) )

The DAT premium has disappeared, and the momentum for increased holdings has stalled.

At the same time, when the mNAV premium of DAT stock relative to BTC holdings disappears, companies will no longer be able to issue more stock to exchange for cheaper Bitcoin, and the upward momentum will also slow down.

He pointed out that these factors together create a false sense of liquidity: "The seemingly strong institutional buying is actually driven by arbitrage purposes, not by long-term buyers."

Dollar liquidity shrinks rapidly

On the other hand, the evaporation of nearly $1 trillion in dollar liquidity since July has also become one of the main reasons for the limited price growth of BTC .

With ETF basis arbitrage no longer attracting institutions, DAT purchases slowing down, the Treasury replenishing TGA, and the Federal Reserve not yet officially restarting quantitative easing, Bitcoin, as a risk asset, will be the first to bear the brunt.

Political Moment: Trump and Treasury Secretary Bessent Will Ultimately Lead the Markets to Take Off

Hayes points out that US monetary policy is essentially a political act: "Trump wants to maintain asset prices to secure political support, but he has to pretend to be hawkish in the face of inflationary pressures. However, the market will eventually force the government to make a choice."

He bluntly stated that the United States will face a choice: "either print money to save the market or allow credit contraction to trigger a wave of unemployment."

However, in political reality, bailouts, which involve printing money, are always more acceptable than recessions.

Therefore, Hayes believes that Trump and Treasury Secretary Bessent will ultimately inject funds back into the market through either private fiscal maneuvers or overt QE.

( Arthur Hayes is optimistic about Japan's new Prime Minister Sanae Takaichi's trillion-dollar economic plan: BTC could reach millions of dollars )

Accumulated credit pressures increase the likelihood of easing; Bitcoin targets $250,000.

Hayes also pointed out the unusual situation of BTC continuing to fall while many US indices remain at high levels, believing that this, coupled with the rapid decline in the dollar liquidity curve, could be a precursor to accumulating credit pressure.

When the stock market corrects by 10% to 20% and the 10-year Treasury yield approaches 5%, the government will be forced to intervene and accelerate money printing, pushing up the risk market across the board.

He predicts that once a large-scale easing policy is introduced, Bitcoin could surge to $200,000 or $250,000 by the end of the year; however, it could still fall to $80,000 to $85,000 during this period of weakness.

China's role: China will only fully follow suit with QE after the US prints money.

Finally, regarding the People's Bank of China's first increase in its holdings of government bonds, Hayes believes this is a prelude to China's potential quantitative easing. However, he anticipates the US will first implement QE before engaging in widespread monetary easing to avoid excessive depreciation of the RMB.

He emphasized that if China and the US simultaneously begin monetary expansion, 2026 will become a super bull market year for crypto assets.