SEC addresses fake spot Bitcoin approval announcement

The U.S. Securities and Exchange Commission has confirmed that its X official account was compromised on Tuesday, leading to an unauthorized posting falsely announcing the spot Bitcoin ETF approval.

The SEC’s @SECGov X/Twitter account has been compromised. The unauthorized tweet regarding bitcoin ETFs was not made by the SEC or its staff

an SEC spokesperson.

The fake announcement was posted around 4:12 p.m. ET and lasted about 30 minutes. The SEC has since removed the post and clarified the situation.

“The SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges,” the fake announcement said.

SEC chairman Gary Gensler responded to the false news on the same platform, saying no approval for spot Bitcoin trading and listing had been granted. It remains unclear how the account was compromised. Gensler has not revealed further details.

“The SEC will work with law enforcement and our partners across government to investigate the matter and determine appropriate next steps,” an SEC spokesperson said, as quoted by CNBC.

Republican politicians expressed their anger due to the lack of security control from the SEC over its account. Meanwhile, X head of business operations Joe Benarroch said that the SEC’s official account was secure and the company was investigating the incident.

The incident came as the SEC was expected to announce its decision on a batch of spot Bitcoin ETF applications this week after opposing them for years. The attack caused an industry-wide shock, with applicants saying they were afraid that the SEC might delay its decision due to the hack.

The false market-moving was not the first for Bitcoin. In October 2022, a false report surfaced that fund manager BlackRock had secured approval for a spot Bitcoin ETF. The incident led to a sharp increase in Bitcoin prices.

Bitcoin price increase

After the false announcement, Bitcoin’s price spiked from around $46,730 to $48,000 before declining to about $45,200 after the news was confirmed to be fake. Bitcoin was trading at about $46,150 at 6:15 p.m. ET.

Asgard Markets co-founder Alex Krüger said the fake news incident suggested Bitcoin might not rally as much as the bulls expect when the actual approval news arrives.

Following the incident, nearly $90 million worth of Bitcoin was liquidated. Data show that more than $50 million worth of long positions were liquidated, with $36 million worth of short positions impacted.

Liquidation is where an exchange force closes a trader’s leveraged position due to partial or total loss of the trader’s initial margin. This occurs when a trader is no longer able to meet the margin requirements for a leveraged position, meaning they don’t have sufficient funds to keep the trade open.

Bloomberg analysts estimate that the approval odds of the currently proposed spot Bitcoin ETFs are as high as 90 percent. Meanwhile, crypto market participants on Polymarket believe the approval odds are at 85 percent.

Bloomberg Intelligence ETF analyst James Seyffart said there is a 10 percent or less chance that the SEC will refuse to approve the applications.

The SEC issued its final comments for the applications as recently as Monday evening, and applicants rushed to submit responses on Tuesday morning. Regulatory approval for spot bitcoin ETFs is expected to be granted or refused in the next few days.

Gary Gensler has already start receiving letters regarding the recent breach from the recent develobment

 

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