In a recent development, social media platform X, formerly known as Twitter, disclosed on Wednesday that the Securities and Exchange Commission’s (SEC) account was compromised, leading to a fabricated post claiming the regulator’s approval of a spot bitcoin exchange-traded fund (ETF).
According to X’s official statement, a preliminary investigation revealed that a third party gained unauthorized access to the SEC‘s account by compromising the associated phone number. It was further noted that the compromised account did not have two-factor authentication enabled at the time of the breach.
The incident unfolded shortly after the SEC’s official X account posted an announcement regarding the approval of an ETF directly tracking the spot price of bitcoin. The fraudulent post falsely stated, “Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges.”
SEC Chair Gary Gensler swiftly responded, clarifying that the official SEC account had been compromised, and the tweet was “unauthorized.” The misleading post caused a brief spike in bitcoin prices, reaching nearly $48,000 before settling down.
As of 22:51 ET (03:51 GMT), bitcoin experienced a 1.8% decline, trading at $46,109.7. The misleading announcement occurred during a critical period when investors eagerly anticipate the SEC’s official decision on the listing of a spot bitcoin ETF.
The cryptocurrency market witnessed a notable surge in the first week of 2024, fueled by speculation that the SEC might approve a spot-traded bitcoin ETF. Several fund managers, including BlackRock Inc (NYSE:BLK) and Wisdomtree, adjusted their ETF applications last week based on SEC guidance.
However, the SEC has consistently rejected spot bitcoin ETF listings, citing concerns about inadequate investor protections against cryptocurrency price manipulation. Supporters argue that such rejections are unfounded and that approving a spot ETF could attract significant institutional capital, providing investors exposure to bitcoin without direct cryptocurrency investments.
Despite these arguments, skeptics question the extent of institutional capital inflow into bitcoin after approval, highlighting dwindling investor interest in current ETF offerings that track bitcoin futures on the Chicago Mercantile Exchange over the past two years.
The broader cryptocurrency industry faces a crisis of confidence following high-profile frauds and bankruptcies throughout 2022 and 2023. Trading volumes, particularly in bitcoin, remain below the peaks observed during the 2021 bull run.
