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Cryptocurrency prices swung sharply on Tuesday after a fake post on the U.S. Securities and Exchange Commission's official X account claimed that the regulator had approved the first U.S. spot bitcoin exchange-traded funds. USA
The fake post stated shortly after 4 pm Washington time that the SEC "grants approval for #Bitcoin ETFs to list on all registered national stock exchanges." It was immediately spread on social media, business news websites and Bloomberg TV.
Just over 10 minutes later, the SEC chairman poured cold water on the announcement. Gary Gensler posted on his personal X account: โThe @SECGov Twitter account was compromised and an unauthorized tweet was posted. The SEC has not approved the listing or trading of spot bitcoin exchange-traded products.โ
An SEC spokeswoman said the original publication "was not made by the SEC or its staff." By 5 p.m., SEC staff had regained control of account X and the false post had been removed.
"The SEC will work with law enforcement and our partners across government to investigate the matter and determine appropriate next steps related to both the unauthorized access and any related misconduct," the SEC said, attributing the unauthorized access to " an unknown part".
In a post from an official account on Tuesday night, X saying its initial investigation indicated that "the compromise was not due to any breach of X's systems, but rather due to an unidentified individual gaining control over a phone number associated with the @SECGov account through a third party."
"We can also confirm that the account did not have two-factor authentication enabled at the time it was compromised," the post said, referring to an additional layer of cybersecurity beyond a password. "We encourage all users to enable this additional layer of security."
Bitcoin rallied immediately after the release, posting a 1.5 percent gain on the day, but quickly reversed upon confirmation that the news was false and the price fell as much as 3.4 percent.
Cryptocurrency enthusiasts are on tenterhooks as the SEC is expected to decide later this week whether to approve spot bitcoin ETFs, in what would be a watershed moment for the digital asset.
At least 11 asset managers have pending applications with the SEC to launch spot bitcoin ETFs. The SEC has a deadline of Wednesday to approve some of the requests.
Although the watchdog has previously resisted such products, it now has less room to manoeuvre. A federal appeals court last year ruled that the SEC's rejection of an application filed by Grayscale to convert its $29 billion bitcoin trust into such an ETF was "arbitrary and capricious."
So far this year, the volatile cryptocurrency has gained about 7 percent on hopes that the SEC will grant it approval.
Several applicants have said they received feedback from commission staff indicating approval was possible this week.
Applicants range from large asset managers BlackRock, Invesco and Franklin Templeton to smaller firms such as Ark Investment Management and Bitwise. Earlier this week, companies disclosed fees for its potential products, and several of the challengers substantially reduced their fees or agreed to waive them entirely soon after their inception.
The SEC has long argued that spot bitcoin ETFs cannot guarantee the same level of investor protection as traditional investment products. Gensler published on Monday a short thread at
ETFs hold assets like mutual funds, but trade on exchanges like stocks and generally enjoy preferential tax treatment in the United States. Each of the pending ETFs is intended to invest solely in bitcoin, an evolution from previous products that invest in cryptocurrency futures or companies involved in the crypto industry.
Additional reporting by Hannah Murphy
