SEC Hit By Barrage Of Criticism After Hacked X Account Caused Fake Spot Bitcoin ETF Approval Announcement

Updated: 10 January 2024

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The US Securities and Exchange Commission (SEC) is facing a barrage of criticism after its X account was hacked, leading to the fake approval of spot Bitcoin ETFs (exchange-traded funds).

Ripple’s CEO Brad Garlinghouse said the SEC should be under investigation while Gemini’s co-founder, Cameron Winklevoss, said the event demonstrated that what the financial regulator does best is “manipulating markets and hurting US investors.”

At around 21:00 UTC on January 9, the SEC’s official Twitter account tweeted that all spot Bitcoin ETFs were approved. This announcement saw Bitcoin shoot above $47K.

The hype was short-lived, with SEC Chair Gary Gensler quickly denying the news.

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 fiasco saw over $51 million liquidated from the crypto market per Coinglass. The crypto community is now looking for answers from the regulatory body, whose role is to protect investors from such market-moving mistakes.

X blamed the breach on the SEC and said its account didn’t have two-factor authentication.

“Based on our investigation, the compromise was not due to any breach of X’s systems, but rather due to an unidentified individual obtaining control over a phone number associated with the @SECGov account through a third party,” said the X safety team. “We can also confirm that the account did not have two-factor authentication enabled at the time the account was compromised.”

The SEC Should Investigate Itself

Lawyers told Fox Business that the SEC will have to “investigate itself for market manipulation” after the fake tweet from its account moved Bitcoin’s price.

BREAKING: Securities lawyers tell @FoxBusiness the @SECGov will have to investigate itself for market manipulation after moving the price of $BTC up and down following the hacked tweet that it had approved the first spot BTC ETF and then saying it was fake. That said, for the SEC…

— Charles Gasparino (@CGasparino) January 9, 2024

One X user said the SEC was negligent and added that its security failure had ”just wrecked some real live investors.”

According to Bitcoin advocate Layah Heilpern, the event was “absolute market manipulation.”

Ripple’s Chief Legal Officer, Stuart Alderoty, believes the SEC should use its own playbook. As is required of public companies in such situations, the regulator should publish a comprehensive report on what happened within four days.

Per *its own rules*, w/in 4 days the SEC should disclose the incident's nature and scope, and the impact on the market along with a description of its processes for assessing, identifying, and preventing such cybersecurity threats. https://t.co/CUs3aAunRs https://t.co/nRWAfnirb5

— Stuart Alderoty (@s_alderoty) January 9, 2024

US Politicians Also Gunning For Gensler

US legislators are also weighing in with criticism of their own with Senator Bill Hagerty calling the development a “colossal market-moving mistake” that was “unacceptable.”

Just like the SEC would demand accountability from a public company if they made such a colossal market-moving mistake, Congress needs answers on what just happened. This is unacceptable. https://t.co/tWtLqHtqpu

— Senator Bill Hagerty (@SenatorHagerty) January 9, 2024

Pro-crypto senator Cynthia Lummis has also demanded transparency on what transpired.

“Fraudulent announcements, like the one that was made on the SEC’s social media, can manipulate markets,” she said. “We need transparency on what happened.”

Gensler has already started receiving Congressional letters regarding the breach.

🚨NEW: First Congressional letters regarding yesterday’s hack hit @GaryGensler’s inbox with more expected to trickle in today. https://t.co/gqXjVz2QHi

— Eleanor Terrett (@EleanorTerrett) January 10, 2024