U.S. SEC probes fake post on its X account, bitcoin ETFs not yet approved

Physical representations of the bitcoin cryptocurrency are seen in this illustration taken October 24, 2023. REUTERS/Dado Ruvic/Illustration/File photo

The U.S. securities regulator said someone briefly accessed its X social media account on Tuesday and posted a fake message saying it had approved exchange traded funds or ETF for bitcoin, a move that has been eagerly awaited by the crypto industry.

The Securities and Exchange Commission (SEC) said it has not yet approved spot bitcoin ETFs. The SEC’s account on X, the platform formerly known as Twitter, had been compromised briefly by an unknown party after about 4 p.m. Eastern time but “unauthorized access has been terminated,” the agency said.

It will work with law enforcement to investigate the hack and “related conduct,” the SEC said.

X’s head of business operations, Joe Benarroch, said in a statement that the SEC’s account was secure and the company was investigating the “root cause” of the account compromise.

The unauthorized post said the SEC had granted approval for bitcoin ETFs on all registered national securities exchanges and included a picture purporting to quote SEC Chair Gary Gensler. The price of bitcoin rose after the post, which was picked up by Reuters and other news media that monitor the SEC’s account.

READ: Dollar pulls back, bitcoin jumps ahead of ETF approval deadline

The posting came as the SEC was widely expected on Wednesday to finally approve a batch of ETFs that track the price of bitcoin, in a potential watershed moment for the crypto industry. The unauthorized post surprised the industry, with insiders scrambling to find out whether it was true and why the SEC would first publish something on social media.

Executives from some ETF issuers, speaking on condition of anonymity because of the sensitivity of the matter, said they were startled and surprised by the initial tweet.

One executive said he was “concerned” that the SEC might delay or withhold approval for spot bitcoin ETFs as a result of the hack.

Two issuers, speaking on condition of anonymity, said it was not immediately clear whether the hack would impact the timeline for approvals of the spot bitcoin ETFs. The SEC is due to deliver a decision on a joint proposal from Ark Investments and 21Shares on Wednesday.

Anthony Tu-Sekine, a lawyer with Seward & Kissel, said he did not believe the incident would change the likelihood of approvals at this late stage.

Tu-Sekine said it was not clear why someone would do something like that when the approval was already widely expected. “This is really puzzling,” Tu-Sekine said.

Brief price spike

By 4:11 PM ET, the post on the SEC’s X account had received at least 1 million views. Fewer than 20 minutes later, it was no longer visible and appeared to have been deleted.

The price of bitcoin shot up to around $48,000 on the fake post, before falling to below $45,000 minutes later. It was last down 3.15 percent at $45,513 after the SEC deleted and disavowed the information. Some analysts had expected bitcoin to fall on the ETF approvals, after gaining more than 70 percent in recent months on the expectation of a greenlight.

The SEC declined to say whether authorities have begun to investigate the compromise or whether the incident will affect potential approvals. The SEC has previously rejected all spot bitcoin ETF proposals over fears of market manipulation.

READ: What is a bitcoin ETF?

Accounts on X – like accounts on other social media platforms – are sometimes hijacked by stealing passwords or tricking targets into giving up their login credentials.

Accounts can also be hijacked by compromising the social media platform itself. In 2020, for example, a teenage hacker and his friends broke into X’s internal computer network and seized control of dozens of high-profile accounts, using the access to promote a cryptocurrency scam.

Accounts belonging to Barack Obama, Kim Kardashian, Jeff Bezos and Elon Musk were among those affected at the time.

A spokesperson for X did not respond to a request for comment.

“We’ve come to depend upon this instant social media hit to find out what’s going on in the world,” James Angel, associate professor at Georgetown University’s McDonough School of Business. “We’re definitely going to be more and more vulnerable to this kind of instant misinformation.”