X confirms SEC account was compromised in Bitcoin ETF debacle

Investing.com -- Social media platform X said on Wednesday that the Securities and Exchange Commission’s account was compromised when it made a fake post about the regulator approving a spot Bitcoin exchange-traded fund. 

In a post, the social media platform formerly known as Twitter said that a preliminary investigation showed the account was compromised by a third party gaining access to a phone number associated with the SEC, and that the account did not have two-factor authentication enabled at the time of the breach. 

The announcement comes just a few hours after the SEC’s official X account issued a post that appeared to say that the regulator had approved the listing of an ETF directly tracking the spot price of Bitcoin. 

The fake post read: "Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges."

Chair Gary Gensler almost immediately responded to the announcement, stating that the official SEC account was compromised and that the post was “unauthorized.” 

Bitcoin jumped following the original SEC post, but later retreated after Gensler revealed that it was fake. Anticipation has been at a fever pitch over the possible approval of spot Bitcoin ETFs, which proponents of the cryptocurrency argue could spur a deluge of capital inflows into the digital asset.

Bitcoin traded down 2.1% at $45,449.9 by 06:42 ET (11:42 GMT), after briefly surging to nearly $48,000 after the fake SEC post. 

The world’s largest cryptocurrency saw a sharp melt-up in the first week of 2024, fueled by growing speculation that the SEC was close to approving a spot Bitcoin ETF. The regulator is expected to unveil a decision this week regarding applications from several fund managers for the ETF.

Aspirants including BlackRock Inc (NYSE:BLK) and Wisdomtree were seen altering their ETF applications last week, following guidance from the SEC.

But the securities regulator has so far shot down any attempts at listing a spot Bitcoin ETF, citing a lack of proper protections for investors from price manipulation of the cryptocurrency. 

Proponents of the cryptocurrency argue that the SEC’s rejections are unfounded, and that the approval of a spot ETF is likely to draw in widespread institutional capital into the token, given that it grants investors exposure to the token without needing to directly invest in cryptocurrencies.

But critics have questioned just how much institutional capital will flow into Bitcoin after such an approval, given that current ETF offerings tracking Bitcoin futures on the Chicago Mercantile Exchange have seen dwindling investor interest over the past two years.

The broader crypto industry is also struggling with a massive loss of faith following a series of high-profile frauds and bankruptcies through 2022 and 2023. Meanwhile, trading volumes, particularly in Bitcoin, are well below highs seen during a bull run in 2021. 

Scott Kanowsky contributed to this report.

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App