In a shocking turn of events, the Securities and Exchange Commission (SEC) announced on Tuesday that a post claiming the approval of a long-awaited bitcoin exchange-traded fund (ETF) on the social platform X was “unauthorized” and that the agency's account had been hacked. The post on X, formerly known as Twitter, sent the price of bitcoin soaring by over $1,000 as investors eagerly anticipated the approval. Cryptocurrency investors had already driven bitcoin's price above $46,000 in anticipation of the ETF's approval, which would provide a way to invest in bitcoin without purchasing the cryptocurrency outright on a crypto exchange.
However, SEC Chairman Gary Gensler quickly took to his personal account to refute the announcement, stating that the SEC had not approved the listing and trading of spot bitcoin ETFs. Gensler referred to the post as unauthorized, without providing further explanation. The price of bitcoin experienced a rollercoaster ride, swinging from around $46,730 to just below $48,000 after the unauthorized post, then dropping to approximately $45,200 after the SEC's denial. As of 6:15 p.m. ET, bitcoin was trading around $46,150.
The SEC's social media account being hacked raised concerns about the agency's lax security controls over its accounts. Politicians, particularly Republicans who have expressed frustration with Gensler's leadership of the SEC, quickly expressed anger and demanded answers regarding the breach. Senator Bill Hagerty, a member of the Senate Banking Committee, stated that Congress needs accountability from the SEC, just as they would demand from a public company in a similar situation.
This incident is not the first time false market-moving information about the future of bitcoin has been spread on regulated exchanges. In October, a false report suggested that BlackRock had received approval for a bitcoin ETF, causing a sharp increase in bitcoin prices. The recent hack of the SEC's social media account has raised concerns about account integrity on X, with internet watchdog groups highlighting the spike in toxic content, including hate speech, on the platform.
The SEC spokesperson confirmed that the agency's account on X had been compromised and that the post was fake. The spokesperson did not provide additional details about the incident. The unauthorized post surprised industry insiders, who scrambled to determine its veracity and questioned why the SEC would first publish such information on social media. Executives from ETF issuers expressed concern that the hack might delay or prevent the approval of spot bitcoin ETFs.
Despite the hack, experts believe that the incident is unlikely to impact the likelihood of approvals for spot bitcoin ETFs. Anthony Tu-Sekine, a lawyer with Seward & Kissel, stated that the incident is puzzling, considering the wide anticipation of the ETF approvals. The SEC declined to comment on whether an investigation into the compromise had been initiated or how it might affect potential approvals.
The price of bitcoin experienced significant fluctuations following the unauthorized post, reaching a high of around $48,000 before dropping below $45,000. Some analysts had expected bitcoin to fall upon the ETF approvals, as the cryptocurrency had already gained over 70% in recent months in anticipation of the green light. The SEC's denial of the approval caused a 3.15% decrease in bitcoin's price.
The incident raises concerns about the security of social media accounts and the potential impact of false information on regulated exchanges. The SEC's breach highlights the need for increased security measures and vigilance in preventing unauthorized access to official accounts.
