FILE - The seal of the U.S. Securities and Exchange Commission at SEC headquarters, June 19, 2015, in Washington. The Securities and Exchange Commission said Tuesday, Jan. 9, 2024, that a post on X, formerly known as Twitter, announcing that the securities regulator had approved the trading of exchange-traded funds holding bitcoin was fake, and that the agency’s account had been “compromised.” (AP Photo/Andrew Harnik, File)
In an unexpected turn of events, the Securities and Exchange Commission (SEC) announced on Tuesday that a post from its social media account claiming approval for a long-awaited bitcoin exchange-traded fund (ETF) was "unauthorized" due to a hack.
The message on the platform formerly known as Twitter (X) stated, “The SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges,” causing a rapid spike in bitcoin's price, exceeding $46,000.
Cryptocurrency investors, anticipating the ETF approval, had driven up bitcoin's value. ETFs offer a means to invest in bitcoin without directly purchasing the cryptocurrency from platforms like Binance or Coinbase.
However, SEC Chairman Gary Gensler quickly clarified on his personal account that the SEC's post was unauthorized, stating, “The SEC has not approved the listing and trading of spot bitcoin exchange-traded products,” without providing further details on the hack.
Bitcoin's price initially surged from around $46,730 to just under $48,000 after the unauthorized post, only to drop to about $45,200 following the SEC's denial. Subsequently, the SEC seemed to regain control over its account. The method of the SEC's social media account hack remains unclear, but X's @Safety account reported that an unknown individual gained control through a third party of the phone number linked to the account. It was revealed that the compromised SEC account lacked two-factor authentication.
Politicians, particularly Republicans critical of Gensler's SEC management, expressed frustration over what they perceived as lax security controls. Republican Senator Bill Hagerty demanded accountability, comparing it to the scrutiny public companies face for market-moving errors.
This incident follows a pattern of false market-moving information about bitcoin, such as a misleading report in October suggesting BlackRock's approval for a bitcoin ETF, leading to sharp price increases. Elon Musk's restructuring of Twitter's moderation and security teams in 2022 has raised concerns about account integrity on the platform, especially during an election year. X has not responded to requests for comment on the incident.
