The SEC faces calls for investigation after a social media breach gave a false announcement on Bitcoin ETF approvals, impacting markets.
Prominent legal and political figures in the United States have urged a thorough investigation into the Securities and Exchange Commission (SEC). This demand follows a significant misstep involving the SEC social media account, which gave a false announcement on the approval of Bitcoin exchange-traded funds (ETFs). Consequently, this error led to widespread confusion and significant market impact, with the price of Bitcoin (BTC) momentarily influenced.
SEC’s Social Media Blunder
The incident occurred when the SEC’s account on a major social media platform, previously known as Twitter, was reportedly compromised. An unauthorized post falsely claimed the approval of Bitcoin ETFs, leading to immediate market reactions. The post, which remained live for about 20 minutes, attracted considerable attention, with over 4.4 million views.
The incident raised serious questions about the SEC’s cybersecurity measures, particularly the absence of two-factor authentication on its social media account at the time of the breach. A subsequent investigation by the platform’s security team attributed the account compromise to an unauthorized individual gaining control over a phone number linked to the SEC’s account.
Politicians and Analysts Demand Accountability
The blunder has not gone unnoticed by U.S. politicians and market analysts. Senators Cynthia Lummis and Bill Hagerty, along with Representative Ann Wagner, have been vocal in demanding clarity and transparency from the SEC. They emphasize the need for accountability, similar to what the SEC expects from public companies in such situations.
Bloomberg ETF analyst James Seyffart speculated on the internal repercussions within the SEC, suggesting that SEC Chair Gary Gensler would be seeking responsibility for this breach. Additionally, investment manager Timothy Peterson and U.S. lawyer James Murphy highlighted the irony of the SEC, a body meant to protect investors from market manipulation, involved in an incident that potentially manipulated the market.
Also, the response from Congress has been swift and critical. Senators J.D. Vance and Thom Tillis have formally requested a comprehensive report from the SEC on the incident, citing concerns over the commission’s cybersecurity protocols. Moreover, this request aligns with recently finalized rules on cybersecurity disclosures, mandating a detailed report within four business days in the event of a cybersecurity breach.
Despite the confusion, market analysts, including Bloomberg’s Eric Balchunas, anticipate the official approval of spot Bitcoin ETFs. This anticipation comes amid growing interest in the crypto market and a demand for regulated investment vehicles like ETFs.
The SEC has yet to provide detailed information on how its account was compromised but has denied any involvement of its staff in publishing the unauthorized tweet. Lastly, the incident has put the spotlight on the SEC’s preparedness against cyber threats and its response mechanisms in the event of such breaches.