Someone hacked the US SEC Twitter account to falsely announce Bitcoin spot ETF approvals

This Tuesday afternoon, January 9, the US Securities and Exchange Commission’s (SEC) account on X (formerly Twitter) posted a tweet that the crypto community has been waiting for since 2013 — that the regulator has granted approval for Bitcoin ETFs for listing on all registered national securities exchanges. However, it soon turned out that the SEC’s Twitter account had been hacked, and the announcement was false.

The SEC account did not have 2FA enabled

Given the high profile of the hackers’ target, the safety team at X reacted swiftly, launching an investigation and quickly learning that the account was compromised due to an unidentified party obtaining control over a phone number associated with the account through a third party.

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

The investigation also revealed that the SEC did not activate two-factor authentication (2FA), which is one of the security features that make hijacking accounts much more difficult. This particular revelation raised major security concerns regarding the regulator, attracting criticism from the public.

The people in charge of “protecting investors” and “regulating” #Bitcoin can’t even protect their own X account with basic 2FA…

What a joke.

— Walker⚡️ (@WalkerAmerica) January 10, 2024

The SEC’s chair, Gary Gensler, reacted soon after the false tweet was published, announcing from his personal account that the SEC’s account was compromised. He labeled the SEC’s tweet as a fake, posted by the hacker, and the post was removed within 30 minutes. However, in the crypto industry, 30 minutes was more than enough to cause some serious damage.

Some have since theorized that the move was an “inside job,” but X was able to confirm that the phone number associated with the account was compromised, which quickly debunked any such theories.

Even so, the tweet brought on certain consequences. It emerged only a day before the deadline for the SEC’s decision regarding the spot Bitcoin ETF applications submitted by ARK and 21Shares. While the SEC has been delaying the approval of a Bitcoin ETF product for over a decade now, this time, the industry believes that the regulator has no more excuses and reasons to reject the applications.

SEC faces a major backlash in the aftermath of the hack

As mentioned, the announcement of an ETF approval was highly anticipated, with experts believing that there is a 90% likelihood of the approval before the deadline, which is today, January 11, 2024.

Soon after the tweet was published, Bitcoin price skyrocketed to nearly $48k, only to drop after Gensler revealed that the announcement was fake. This led the largest cryptocurrency’s price to drop to $45.5k — a support that managed to stop its fall, and allow it to bounce back up to around $46.25k.

However, the 4% price surge allowed experts to see how the coin would have reacted to the ETF approval, revealing that the predictions of a price surge were accurate.

As for the SEC, the regulator is now facing heavy criticism from the public, especially since Gensler was rather vocal about cybersecurity for financial services companies, and encouraged investors to secure their accounts. After all that, it turned out that the SEC failed to secure even its social media account.

However, certain members of the government also decided to get involved, such as Senator Bill Hagerty, who has demanded that the SEC answers questions regarding the “market-moving mistake,” especially amid the public’s accusations of market manipulation.

Just like the SEC would demand accountability from a public company if they made such a colossal market-moving mistake, Congress needs answers on what just happened. This is unacceptable. https://t.co/tWtLqHtqpu

— Senator Bill Hagerty (@SenatorHagerty) January 9, 2024

Others got involved as well, calling out the SEC’s “horrible rulemaking,” while crypto entrepreneurs and influencers themselves started criticizing the SEC, especially after the regulator led so many crypto firms to court for alleged securities law vilations, only for its own X account to be used for market manipulation.

At the same time, securities lawyers have started suggesting that the SEC might need to investigate itself for market manipulation incidents.