In a sudden turn of events on Tuesday, Bitcoin experienced a brief surge following a post on the US markets regulator’s X account (formerly Twitter) claiming approval for cryptocurrency exchange-traded funds (ETFs). However, the Securities and Exchange Commission (SEC) swiftly deleted the post, attributing it to a security breach.
The misleading announcement propelled Bitcoin’s value to nearly $48,000 before a subsequent correction brought it back to approximately $46,000. The incident underscores the challenges and risks associated with digital assets, as regulatory bodies grapple with maintaining cybersecurity in an evolving financial landscape.”
A much-awaited announcement on the approval of spot Bitcoin ETF was expected from the US regulators later this week. However, a misleading post surfaced on the SEC’s official X account around 16.00 Washington time (16.00 GMT) claiming that the regulator had given the green light for #Bitcoin ETFs to be listed on all registered national securities exchanges. The post became ‘viral’ immediately among the social media users and business news outlets, leading to widespread dissemination of the fake information.
In a swift response to the false announcement, SEC Chair Gary Gensler took to his personal X account, stating, “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.”
According to an SEC spokesperson, the security breach occurred on the @SECGov x.com account shortly after 4 pm ET, with unauthorized access and activity by an unknown party for a brief period. The spokesperson confirmed, “That unauthorized access has been terminated.” Besides this, the SEC is committed to collaborating with law enforcement and government partners to thoroughly probe the incident and determine the appropriate steps regarding both the unauthorized access and any associated misconduct.
Against the backdrop of the recent incident, around a dozen companies are eagerly awaiting approval to list Bitcoin-backed ETFs in the United States. The SEC has a deadline of January 10 to make a decision on at least one of these applications, fueling speculation within the crypto community that a series of announcements may be on the horizon around that date.
Before a spot-backed Bitcoin ETF can kick off trading, it needs to clear two technical hurdles. Firstly, the SEC must greenlight the 19b-4 filings from the exchanges planning to list the ETFs. Secondly, the regulator has to give the nod to the relevant S-1 forms and registration applications from potential issuers, including major players like BlackRock Inc. and Fidelity.
Concerns have emerged among some observers that the recent mix-up might be seized upon as a reason to push back the decision beyond the expected January 10 deadline, though many view this as a distant possibility.
Dennis Porter, CEO of Satoshi Action Fund, sharing his perspective on the matter, said, “It depends on the intention of the SEC. If the SEC is looking for ways to continue delaying the ETF process, it’s possible they could use this as a reason to slow down the roll out.”
U.S. attorney and commercial litigator Joe Carlasare weighed in on the situation, acknowledging that while anything is possible, he strongly leans towards the SEC still reaching a decision by the January 10 deadline.
Carlasare, sharing his view, said, “Anything is possible, but I find [it] to be extremely unlikely [that] they aren’t going to approve or reject based on this incident.”
On the flip side, Mati Greenspan from the cryptocurrency-focused finance firm Quantum Economics suggested that the securities regulator might leverage the false post as a reason for a potential delay.
According to Digital asset lawyer Anthony Tu-Sekine from Seward and Kissel, the recent incident is unlikely to alter the chances of approvals at this advanced stage. Tu-Sekine expressed his confusion over the situation, mentioning to The New York Post that he couldn’t fathom why someone would pull such a stunt when the approval was already widely expected. “This is really puzzling,” Tu-Sekine remarked.