January 10, 2024 at 14:24 GMTModified date: January 10, 2024 at 14:24 GMT
January 10, 2024 at 14:24 GMT

Bitcoin swings on fake ETF news from hacked SEC account

In a surprising turn of events, a tweet from the SEC’s official account falsely claimed approval of spot Bitcoin ETFs, only to be later revealed as misinformation.

Bitcoin swings on fake ETF news from hacked SEC account

In a series of events that took everyone by surprise, spot Bitcoin exchange-traded funds (ETFs) were approved, according to a tweet posted by SEC’s official X account. This was later revealed to be a hoax caused due to a compromised account.

The now-deleted tweet read, “Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges.”

This message was falsely attributed to SEC Chair Gary Gensler and came along with a made-up quote from him. It further claimed that the approved ETFs would be under continuous surveillance and compliance measures.

Within a span of about ten minutes, Gensler debunked the news, sending out a post from his X account. It said:

Bitcoin reacted to these events by climbing up to touch $48,000, only to fall steeply later.

X confirms the hack

The hack was soon confirmed by X, post its preliminary investigation of the event. 

It clarified that 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 associated with the SEC’s account through a third party. 

The lack of two-factor authentication (2FA), a critical security feature, was then identified as a key vulnerability that led to the breach. The same was not enabled on the SEC’s account at the time of compromise. 

The post made by X also encouraged all users to enable this extra layer of security.

Many raised concerns about the security measures in place at such high-profile government agencies, especially in the context of sensitive financial information. 

“How are you supposed to protect investors when you can’t even protect your Twitter account?”, replied one of the X users to the news.

Senators demand report

Along with causing a market upheaval, the security breach also attracted the attention of several US senators. 

Lenators led by J.D. Vance and Thom Tillis, the senators wrote a letter to the SEC Chair requesting a detailed report on the event. They described the incident as raising “serious concerns” about the commission’s internal cybersecurity procedures. 

The letter expressed their concerns about the implications of such a breach on national financial security and market integrity. They also called the breach “antithetical to the Commission’s tripartite mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”. 

Senators Lummis and Hagerty also joined in demanding clear explanations regarding the incident. They emphasised the critical need for robust measures to prevent such breaches, highlighting their potential to significantly affect the markets. 

A deadline has been set for the SEC, requiring them to submit a comprehensive report by 23 January.

Bitcoin’s fluctuation

Bitcoin’s reaction to the false news was swift and significant. The cryptocurrency’s value spiked, reflecting the market’s sensitivity to the highly-anticipated ETFs approval news. 

$BTC peaked from $46,800 to $47,680 in minutes, breaking the $47K  barrier. It almost touched $48K, only to fall down as the truth emerged. It then corrected itself and is now changing hands for $45,688, down by almost 2% daily. 

As the price of Bitcoin surged past $47,000, it caused substantial losses for traders betting against it.

Following the SEC’s hacked tweet, the market saw intense activity with over $500 million in futures positions opened within ten minutes. 

This led to significant liquidations: $50 million in long positions and $36 million in short positions were wiped out due to rapid price fluctuations. 

As per multiple reports, it has been revealed that the incident resulted in about $190 million in trading losses over 48 hours in total. 

Despite the drawdown in price, Bitcoin continued to trade in the green on its chart. Technical indicators also continued in the bullish zones.

The Moving Average Convergence/Divergence (MACD) is still emanating green histograms, post its bullish crossover of lines.

However, widening Bollinger Bands indicated the presence of high market volatility in the coming trading sessions.