How a Fake ETF Post From The Official SEC Account Shook the Bitcoin Market

Key Insights

• The SEC’s Twitter account just got hacked and was used to announce a fake ETF approval.
• X has stated that the official SEC account lacked basic security measures, which has come as a shock to commentators.
• Bitcoin and Ethereum prices fluctuated drastically before settling back as the fake news dissipated.
• Some analysts believe the incident was an actual hack, while others suspect deliberate manipulation by the SEC or a third party.
• The fake announcement is likely to delay any potential approvals for the much-anticipated Bitcoin ETFs.

The U.S. Securities and Exchange Commission’s (SEC) official X account came online suddenly on Tuesday, January 9, 2024, and published a post.
Contents
Key Insights
The SEC’s Account Compromise On Bitcoin
The Market Reaction
The Analysts’ Opinion
In this post, the SEC account stated that the agency had now authorized the listing and trading of bitcoin exchange-traded funds (ETFs) on all regulated national securities exchanges.
As anyone could have guessed, Bitcooin’s price exploded upwards, before crashing down again, a while later.
Soon after this happened, the SEC deleted the post and declared that that it was hacked, and that the previous post was fake. 
The internet at the moment, is abuzz with speculation: What happens now, that the agency in charge of keeping investors safe from scams and manipulation, is at the centre of one of the biggest manipulation attempts on Bitcoin in years?

The SEC’s Account Compromise On Bitcoin

One of the main ways the SEC interacts with the public is through its X account, which has more than 1.2 million followers.
It only made sense that the crypto community watched this account’s tweets, hoping for some news of the ongoing ETF deliberations.
Imagine the surprise when around 4 p.m. EST on Tuesday, the SEC account tweeted the words “$BTC.”


Soon after, a second Tweet went out, with the words “The SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges.”
This tweet featured the SEC logo, as well as a supposed statement from Gensler that said:
“Today’s approval enhances market transparency and provides investors with efficient access to digital asset investments within a regulated framework”

The deed had been done. Thousands of people saw and shared the message on X and other platforms before it was quickly removed. At first, many investors thought the tweet was real and that the SEC had finally approved the long-awaited bitcoin ETFs. However, the euphoria turned sour when Gensler tweeted from his own official account, that the SEC’s account had been hacked and that the post was not approved. “The @SECGov X account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.”

Later, X acknowledged that the SEC’s account had indeed been hacked and that a bad actor had used a third party to gain access to a phone number connected to the account. Moreover, as unbelievable as it sounds, X also stated that the SEC account DID NOT have two-factor authentication activated at the time of the hack. The Market Reaction How this new development affected the market is anybody’s guess. The price of bitcoin, according to CoinMarketCap, surged to about $48,000 following the fake post, before dropping to less than $45,000 a few minutes later. Data from CoinGlass shows that the price movement resulted in liquidations of around $90 million on long and short Bitcoin trades across multiple exchanges.

The price of Ethereum also reacted, increasing to above $3,800 before falling to below $3,700.
The crypto market’s total market cap also rose by around $50 billion, only to decline by almost $70 billion in mere minutes.

The Analysts’ Opinion

The fake post sparked a lot of reactions and opinions from analysts, experts, and commentators in the crypto space, a lot like this hilarious one.
For example, Nick Tomaino has brutally criticized the SEC, stating that the SEC missed the scam at FTX, attacked good actors like Coinbase, and “botched the Bitcoin ETF announcement”. Among other things.


Jack Dorsey, the original creator of Twitter, was even more skeptical. According to an alleged tweet from Dorsey, there is “no way” the incident with the SEC’s Twitter account was a hack. This suggests that the previous day’s events are a result of deliberate manipulation by either the SEC itself or another entity. Ivan, the CEO of the web3 tooling framework, Moralis, has also questioned whether the SEC “hacked itself”, as explained in this tweet. Others like Bloomberg ETF analyst, Eric Balchunas have opined that the SEC likely meant to approve an ETF, just not today.

Balchunas says “I think someone prepped a planned tweet and put the wrong date, bc the tweet would have made PERFECT sense tomorrow at this time”
To summarize things, we will likely never know what happened with the SEC’s fake announcement.
However, this incident is bound to have pushed any possible ETF approvals further into the unpredictable future.
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