SEC: night of ordinary madness between ETFs, hacks, and accusations

Due to the SEC’s X account hack, a false post announced the approval of Bitcoin spot ETFs: details and reactions.

In the late evening of January 9th, the official X account of the Securities and Exchange Commission (SEC) announced the approval of spot Bitcoin ETFs.

Approximately 15 minutes after the announcement, SEC Chairman Gary Gensler declared that the SEC’s account had been compromised and denied the approval of the ETFs:

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.

— Gary Gensler (@GaryGensler) January 9, 2024

A few minutes later, confirmation also came from the official SEC profile:

The @SECGov X account was compromised, and an unauthorized post was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.

— U.S. Securities and Exchange Commission (@SECGov) January 9, 2024

The original tweet was then deleted.

Details of the attack

According to the security team at X, an unidentified individual managed to take control of the phone number associated with the SEC account through a SIM swap attack. The attack involves stealing the victim’s identity by gaining control of their phone number, which can then be used to access accounts on various platforms.

The security team at X confirmed the attack, stating that the SEC account did not have two-factor authentication enabled at the time of the attack:

We can confirm that the account @SECGov was compromised and we have completed a preliminary investigation. Based on our investigation, the compromise was not due to any breach of X’s systems, but rather due to an unidentified individual obtaining control over a phone number…

— Safety (@Safety) January 10, 2024

Market reaction

Following the false SEC post, the news of the approval caused a brief surge in the price of Bitcoin to around $47,900 before a drop to approximately $44,900. The news and the short period of volatility led to over $210 million in liquidations.

Social media reactions

There were various reactions on social media after the confirmation of the compromise of the SEC’s X account.

Some users questioned how the SEC could protect investors if it couldn’t secure its own X account.

How are you supposed to protect investors when you can’t even protect your Twitter account?

— Walker⚡️ (@WalkerAmerica) January 9, 2024

Others, immediately after Gensler’s tweet, accused the SEC of market manipulation and asked Elon Musk, CEO of X, if the SEC account had indeed been compromised.

Tyler Winklevoss, co-founder of the Gemini exchange, stated:

I expect @SECGov Enforcement to send the SEC’s Social Media and Cybersecurity teams a Wells Notice any minute.

— Tyler Winklevoss (@tyler) January 9, 2024

Senator Cynthia Lummis also expressed her opinion on the matter:

Fraudulent announcements, like the one that was made on the SEC’s social media, can manipulate markets. We need transparency on what happened.

— Senator Cynthia Lummis (@SenLummis) January 9, 2024

Waiting for approval

The events bring us to today, Wednesday, January 10. This is the date by which the SEC must provide an opinion regarding the spot Bitcoin ETF proposed by ARK Invest. In all likelihood, to avoid favoring the issuer over competitors, the SEC will make a decision that applies to all the spot ETFs. In the case of approval, according to the latest news, the ETFs could be launched on the market as early as tomorrow, Thursday, January 11.