Crypto traders had a volatile Tuesday after a false tweet from the U.S. Securities and Exchange Commission (SEC) said that a spot Bitcoin exchange traded fund (ETF) had been approved.
In a tweet a few minutes later, SEC Chair Gary Gensler clarified that no such approval had been made, and claimed that the SEC’s official X account had been compromised by a hacker.
A spokesperson for the SEC also told The Block in emailed comments a few hours later, that the agency would “work with law enforcement” to determine appropriate next steps relating to “both the unauthorized access and any related misconduct.”
The price of Bitcoin briefly spiked to a high of $47,890, before crashing down to $45,430 after Gensler’s comments. The aftermath for traders with money on the line was significant, with a near-equal number of long and short positions liquidated.
Data from Coinglass shows that more than $214 million has been liquidated from over 71,200 traders in the crypto market over the last 24 hours, with $131 million longs and $83 million shorts liquidated. Over $50 million of those liquidations took place in the hour that followed the development.
The market-wide chaos sparked outrage from the crypto community, with many likening what happened to the SEC to outright market manipulation.
Hey @GaryGensler, I read on the SEC official X Account that you approved the Bitcoin Spot ETFs and then I bought some $BTC but then it crashed a couple minutes later. How do I get my money back from the SEC?#firegarygensler #bitcoinetf https://t.co/fDfosG3JLP
— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1) January 9, 2024
Some X users pointed to the irony of the SEC’s previous comments cautioning investors against trusting information about the SEC that did not come from the agency itself.
Several market participants also called for X to investigate whether the SEC’s account was actually breached by a third party, with many suggesting that a more plausible explanation was that a tweet draft of approval was inadvertently released ahead of time.
A tweet from X’s official “Safety” account later confirmed that the U.S. securities regulator’s account was, in fact, hacked and revealed that the source of the compromise was an individual obtaining unauthorized access through a phone number associated with the SEC’s account.
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
“We can also confirm that the account did not have two-factor authentication enabled at the time the account was compromised,” noted the X Safety team.
In a wider market context, however, the price action that ensued from news of a potential approval reflects how quickly the market prices in both positive and negative developments on the spot Bitcoin ETF front.
With the deadline for an official decision from the SEC on Ark/21 Shares application on Wednesday, industry watchers across the world will likely be bracing for impact.