X, the social media platform formerly known as Twitter, confirmed on Wednesday that the Securities and Exchange Commission’s (SEC) account was compromised in a fake post announcing approval for a spot bitcoin exchange-traded fund (ETF).
According to X, a preliminary investigation revealed that a third party gained access to a phone number associated with the SEC, leading to the compromise of its account. Notably, the SEC account did not have two-factor authentication enabled at the time of the breach.
The deceptive post, which triggered a brief spike in bitcoin prices, falsely claimed that the SEC had approved the listing of a Bitcoin ETF directly tracking the spot price of the cryptocurrency. SEC Chair Gary Gensler promptly responded, clarifying that the announcement was unauthorized.
The incident occurred at a time when investors were eagerly anticipating the SEC’s actual decision on the approval of a spot-traded bitcoin ETF. Bitcoin prices briefly surged to nearly $48,000 after the fake SEC post but later settled down. As of the latest data, Bitcoin was trading at $46,109.7, reflecting a 1.8% decrease.
The cryptocurrency market has been closely watching the SEC for potential approval of a spot bitcoin ETF. Several fund managers, including BlackRock Inc and Wisdomtree, have submitted applications, with expectations for an announcement from the SEC this week.
The SEC has previously rejected proposals for spot bitcoin ETFs, citing concerns about investor protection and the potential for price manipulation in the cryptocurrency market. Proponents argue that the approval of a spot ETF could attract significant institutional capital, providing exposure to bitcoin without direct cryptocurrency investments.
However, skeptics question the impact of such approval on institutional capital inflow, given the declining interest in existing ETFs that track bitcoin futures. The broader crypto industry has also faced challenges, including frauds and bankruptcies, leading to a loss of faith and reduced trading volumes compared to the 2021 bull run.