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SEC Twitter Hacked: Bitcoin Price Sees Through Ruse as Agency Left Embarrassed

Last Updated January 10, 2024 9:53 AM
Teuta Franjkovic
Last Updated January 10, 2024 9:53 AM

Key Takeaways

  • A tweet from the SEC’s account falsely announcing the approval of a Bitcoin ETF caused a brief surge in BTC price.
  • The tweet was the result of a security breach, not a mistake by the SEC.
  • The SEC had not enabled two-factor authentication on its account, which made it easier for the attacker to gain access.
  • Republicans have criticized the SEC for lax security measures and are calling for an explanation.

The official Twitter account of the United States Securities and Exchange Commission (SEC) was reportedly “compromised”  on Tuesday, leading to a tweet falsely claiming that a long-awaited Bitcoin ETF had been approved.

This unauthorized tweet caused a surge in the price of Bitcoin , which then stabilized after the truth became known.

Unauthorized Tweet Spikes BTC Price, Prompts Clarification

The SEC said that a recent tweet , which announced the approval of a much-anticipated Bitcoin exchange-traded fund, was “unauthorized” and a result of the account being “compromised.”

compromised SEC
Credit: Twitter/X

The post said: “The SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges.”

Once it came out, Bitcoin went up more than $1,000. This spike occurred when BTC was already worth more than $46,000, fueled by expectations of the ETF’s approval.

An ETF (Exchange-Traded Fund) would offer investors an alternative method to invest in Bitcoin, allowing them to gain exposure to the cryptocurrency without the need to directly purchase it through a crypto exchange like Binance or Coinbase.

$50M in Leveraged Derivatives Positions Wiped Out

Shortly after the post about Bitcoin ETF approval appeared on the SEC’s account, SEC Chair Gary Gensler posted  that the SEC’s account had been compromised. He emphasized that “the SEC has not approved the listing and trading of spot Bitcoin exchange-traded products”. He also labeled the initial post as unauthorized, though he did not initially provide extra details.

The platform X, owned by Elon Musk, confirmed the breach of the SEC’s account. It attributed it to an “unidentified individual” who gained control over a phone number linked to the agency’s account via a third party. The platform also noted that at the time of the compromise, the SEC had not enabled two-factor authentication  on its account. X also said that the incident was not a result of any system breach on its end, based on preliminary findings from their investigation.

Following the unauthorized post, the price of Bitcoin experienced significant volatility. It initially jumped from approximately $46,730 to just below $48,000. However, after the SEC issued its denial, the price dropped to around $45,200. By 6:15 pm EST, Bitcoin was trading at approximately $46,150.

During this period of volatility, more than $50 million in leveraged derivatives trading positions were wiped out within an hour, according to data from CoinGlass .

Prompts Calls for Accountability

The specifics of how the SEC’s social media account was compromised, first remained unclear. Then, late on Tuesday, the Safety team of the platform X announced that they had concluded their “preliminary investigation” into the incident involving the SEC’s account, which had disseminated false information about the approval of Bitcoin ETF applications.

The platform X clarified  that the compromise of the SEC’s account was not a result of any breach within X’s systems. Instead, it occurred because an unidentified individual gained control over a phone number linked to the @SECGov account through a third party. This method of account access bypassed X’s direct systems.

Soon after Gary Gensler issued his statement , it appeared the SEC had regained control over its account.

This incident sparked immediate reactions from politicians. Republicans, who have previously expressed dissatisfaction with Gensler’s leadership at the SEC, quickly voiced their concerns.

Republican senator Bill Hagerty of Tennessee, from the Senate banking committee, said :

“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.”

U.S. senators J.D. Vance and Thom Tillis have also formally requested  an explanation from the SEC, seeking clarity on the apparent lapse in its cybersecurity practices. Their letter demands a thorough account of how such a breach occurred and what steps the SEC is taking to prevent future incidents.

This incident is not the first instance of false market-moving information affecting the future of Bitcoin on regulated exchanges. In  October 2023, a misleading report suggested that fund manager BlackRock had received approval for a Bitcoin ETF . This led to a sharp increase in Bitcoin prices, demonstrating the impact of such misinformation on the cryptocurrency market.

 

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