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SEC Twitter Hack Slammed by US Senators, Labeling it ‘Unacceptable’ and ‘a Colossal Error’

Last Updated January 10, 2024 12:05 PM
Josh Adams
Last Updated January 10, 2024 12:05 PM
Key Takeaways
  • The crypto markets have been eagerly awaiting news of a spot Bitcoin ETF approval.
  • When the SEC’s Twitter (now X) account was hacked on Tuesday, Bitcoin’s price shot up.
  • Now, US Senators are asking for answers on the SEC’s poor cybersecurity.

The United States Securities and Exchange Commission (SEC) was sent scrambling Tuesday afternoon after hackers took control of the agency’s official Twitter account. The security breach, which gave the perpetrators access for around 15 minutes, led to significant volatility in the Bitcoin (BTC) market. In turn, it has also cast doubt on the SEC’s cybersecurity policies.

SEC Social Media Compromised 

Shortly after 4pm EST, the compromised SEC Twitter account posted a fraudulent announcement, saying the agency had approved several spot Bitcoin exchange-traded funds (ETFs). This news prompted Bitcoin prices to immediately spike by nearly 5% to more than $47,000. 

However, SEC Chairman Gary Gensler soon tweeted from his personal account that the agency’s account had been “compromised” and no Bitcoin ETFs were given the green light. Following this clarification, Bitcoin prices plunged by more than $2,000.

In response to the chaos caused by the hack, Senators JD Vance and Thom Tillis have demanded urgent answers from Gensler. In a letter, they voiced serious concerns over the SEC’s cybersecurity procedures, calling it a ‘colossal error’. The pair asked him to explain, by January 23rd, whether the security breach came from an insider and if it will impact the timeline for making a final decision on spot Bitcoin ETFs.

The hack also provided new ammunition for Bitcoin advocates who feel the SEC has unnecessarily delayed approving cryptocurrency ETFs. Some critics highlighted the irony of the regulator falling victim to a major cyber attack after repeatedly warning of potential risks from digital assets.

The SEC is now collaborating with law enforcement to get to the bottom of the security failure. Investigators will look into how the perpetrators gained control of the SEC’s phone number associated with the Twitter account, which apparently lacked two-factor authentication.

Market Eagerly Awaits News of a Spot Bitcoin ETF Approval

The incident comes just days before a long-awaited SEC deadline to approve or deny several spot Bitcoin ETF applications. The SEC has so far refused to allow such products, due to worries about potential fraud and manipulation. However, many experts predict approvals are imminent after the agency lost a court case on the matter last August.

Securing regulatory approval would be a major milestone as it would give mainstream investors easy access to Bitcoin through normal brokerage accounts for the first time. However, this week’s Twitter hack gave the crypto community a turbulent rollercoaster ride. It has raised fresh worries from lawmakers about the SEC’s cybersecurity preparedness as it seeks to oversee volatile digital asset markets. 

The coming days will be crucial for the regulator to restore confidence in its systems after the breach as it makes a final decision.

 

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