SEC Cyber Breach: False BTC ETF Approval Announcement Rattles Markets

Share IT

Key Takeaways

  • The misinformation triggered a temporary surge in Bitcoin prices
  •  The SEC assured collaboration with law enforcement in the ongoing investigation

The U.S. Securities and Exchange Commission (SEC) found itself grappling with a cybersecurity breach and a subsequent trust crisis on January 9, as hackers infiltrated its social media account to falsely declare the approval of spot Bitcoin exchange-traded funds (ETFs). 

In a confirmation that sent shockwaves through the cryptocurrency market, the SEC clarified that it had not endorsed any Bitcoin ETF applications, contradicting the misleading announcement made on its compromised X (formerly Twitter) account.

The breach saw hackers briefly taking control of the SEC’s X account, disseminating a statement that erroneously asserted the regulatory approval of long-anticipated spot Bitcoin ETFs. 

This misinformation triggered a temporary surge in Bitcoin prices, with the world’s largest cryptocurrency briefly reaching nearly $48,000. However, the bubble burst when the SEC promptly debunked the false claim, causing Bitcoin to plummet nearly 6% to $45,100.

The incident prompted swift action from U.S. authorities, who initiated an investigation into the breach of the social media account belonging to Wall Street’s primary regulatory body.

 The SEC assured collaboration with law enforcement in the ongoing investigation, confirming the termination of unauthorized access and disavowing the misleading post as having no origin from the SEC or its staff. SEC Chair Gary Gensler, in a separate statement on his personal X account, emphasized that no decision regarding Bitcoin ETFs had been reached.

In a subsequent statement, an SEC spokesperson acknowledged the breach, stating that there was unauthorized access and activity on the compromised account by an unknown party. The spokesperson highlighted that the SEC would work diligently with law enforcement and government partners to investigate the breach and determine appropriate next steps.

Revelations from X’s Safety team indicated that the SECgov account lacked two-factor authentication, enabling the attacker to gain control over a phone number tied to the account. This vulnerability served as an entry point for the unauthorized access and subsequent dissemination of false information.

As the regulatory body faces scrutiny over the breach, market observers remain on edge as the SEC is anticipated to make decisions regarding spot Bitcoin ETFs. Despite the misleading announcement, SEC Chair Gensler reiterated that the ETFs had not been authorized, emphasizing the need for accurate information dissemination in the volatile cryptocurrency landscape.

The compromised SECgov X account had tweeted, “Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges. The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.” This tweet included a graphic with a quote purportedly from Gensler. The account also posted a second tweet simply saying “$BTC,” but this post was swiftly deleted.

Share IT
Saniya Raahath
Saniya Raahath

Get Daily Updates

Crypto News, NFTs and Market Updates

Can’t find what you’re looking for? Type below and hit enter!