The U.S. Securities and Exchange Commission (SEC) has confirmed that its X account was hacked on Tuesday, with the attacker posting a false announcement of the approval of bitcoin exchange-traded funds (ETFs).
According to the SEC, there was a brief unauthorized access by an unidentified entity around 4 p.m. Eastern time (2100 GMT). The unauthorized post claimed SEC had granted approval for bitcoin ETFs across registered national securities exchanges with an image allegedly quoting SEC chair Gary Gensler. It remained visible for approximately 30 minutes before being deleted.
The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.
— Gary Gensler (@GaryGensler) January 9, 2024
The false announcement led various news outlets and online figures to report on the SEC's alleged approval of the much-anticipated spot bitcoin ETFs.
Gensler also took to his account to address the matter, saying, "The SEC has not approved the listing and trading of spot bitcoin exchange-traded products." Following Gensler's statement, the SEC regained control of the account.
The unauthorized SEC post arrived as the industry awaited the potential approval of bitcoin-tracking ETFs. An ETF offers a means to invest in Bitcoin without directly buying the cryptocurrency from platforms like Binance or Coinbase. The post caused surprise and prompted queries about its legitimacy and the SEC's use of social media for announcements.
As announced by the @Safety account on Tuesday night, X’s initial investigation revealed that an unknown person had gained control of the SEC’s account's phone number "via a third party." The explanation lacked further details but mentioned the compromised SEC account, @SecGov, did not use two-factor authentication.
The @SECGov X account was compromised, and an unauthorized post was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.
— U.S. Securities and Exchange Commission (@SECGov) January 9, 2024
Before this incident, politicians, especially Republicans, have consistently voiced dissatisfaction with Gensler's SEC management. Regarding the attack, they expressed anger over what they perceived as inadequate security controls on the SEC's end.
“Just like the SEC would demand accountability from a public company if they made a colossal market-moving mistake, Congress needs answers on what just happened,” said Republican Sen. Bill Hagerty of Tennessee of the Senate Banking Committee.
Aftereffects
Following the false post, the price of Bitcoin surged to approximately $48,000 before dropping to below $45,000 shortly afterward. Although its price has notably increased over the past year, it remains significantly lower than its peak of over $68,000 in 2021. Currently, it's down by 3.15 percent at $45,513 after the SEC denied the information.
CoinGlass data reveal that in an hour of the erratic price action, crypto exchanges liquidated over $50 million worth of derivatives trading positions. Liquidations occur when exchanges forcibly close a trader's position because of margin losses.
Earlier on Tuesday, another false social media post also induced significant volatility. A tweet on X regarding the passing of the dogecoin (DOGE) mascot caused DOGE to surge by up to nine percent, only to decline swiftly as the news was later confirmed to be false.
Some observers joked about the false announcement, with a post reading "Spot bitcoin ETFs were approved for 0.07 Scaramuccis." It referenced the notably brief tenure of Anthony Scaramucci, who served as White House Communications Director for less than a week during the Trump administration.
A few unnamed executives at several ETF issuers, speaking anonymously due to their sensitive nature, expressed surprise and concern over the initial tweet. One executive voiced worries that the SEC could potentially delay or withhold approval for spot bitcoin ETFs following the hack. Meanwhile, two anonymous issuers were uncertain whether the hack would affect the approval schedule for spot bitcoin ETFs.
The SEC is set to announce a decision on Wednesday regarding a joint proposal from Ark Investments and 21Shares.
Certain analysts anticipated a decline in Bitcoin's value upon ETF approvals, given its surge of over 70 percent in recent months fueled by the anticipation of a decision.
Alex Krüger, co-founder of Asgard Markets, echoed this sentiment, suggesting that today's events hinted that Bitcoin might not experience the anticipated rally when actual approval news surfaces, contrary to bullish expectations.