- Hackers targeted the SEC’s Twitter, causing Bitcoin prices to swing wildly, with over $86 million in positions liquidated.
- The incident highlights security lapses at the SEC, and some accuse them of market manipulation.
The U.S. Securities and Exchange Commission’s (SEC) X account became a victim of hacking, leading to a series of fake tweets that sent shockwaves through the cryptocurrency market. This incident caused nearly $90 million worth of Bitcoin (BTC) long and short positions to be liquidated, exposing the manipulation risks inherent in the industry.
Bitcoin Price Volatility Unleashed
Hackers seized control of the SEC’s X account, which is closely watched by investors and enthusiasts alike. They used it to post a nod of approval for the much-anticipated Bitcoin exchange-traded fund (ETF) decision. The tweets momentarily sent Bitcoin prices soaring from $46,800 to $47,680, only to plummet to $45,400 as the tweets were revealed to be fraudulent.
The @SECGov X account was compromised, and an unauthorized post was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.
— U.S. Securities and Exchange Commission (@SECGov) January 9, 2024
Punters and automated trading bots swiftly reacted to these tweets, resulting in a rapid surge of over $500 million in futures positions within a mere ten-minute window, according to Coinglass. However, the highly leveraged positions were dealt a blow as prices fluctuated, liquidating $50 million in long positions and impacting $36 million in short positions.
Liquidation, a term familiar to traders, occurs when an exchange forcibly closes a leveraged position due to the trader’s inability to meet the margin requirements. In essence, it transpires when the trader lacks sufficient funds to maintain the open trade.
Bitcoin ETF Decision Looms
The cryptocurrency community has been eagerly awaiting the SEC’s decision on thirteen proposed Bitcoin ETFs, which was expected to arrive on Wednesday. Bloomberg analysts have pinned approval odds at over 90%, while crypto market participants hold a slightly more conservative estimate at 85%.
Criticism has been directed towards the SEC regarding its seemingly lax security measures to safeguard its social media accounts. Some have questioned how the financial regulator can adequately protect trillion-dollar markets if it fails to secure its social accounts against malicious actors.
Following the hack, Gary Gensler, the SEC’s Chief, swiftly posted on the compromised X account, confirming the hack and retracting the false announcement within 30 minutes. However, this incident has sparked accusations of market manipulation from notable figures within the crypto community.
The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.
— Gary Gensler (@GaryGensler) January 9, 2024
An SEC spokesperson confirmed that the regulator is actively collaborating with law enforcement agencies and government partners to investigate the matter. Despite the security breach, no delays are expected in the regulatory decision scheduled for the Ark 21Shares Bitcoin Trust.
The Prospect of ETF Approval
The SEC has been inundated with applications for spot Bitcoin ETFs, with a notable shift in dynamics occurring after BlackRock entered the space with a spot Bitcoin ETF application last year.
Market participants remain optimistic about the approval of Bitcoin ETFs at this juncture. Two Bloomberg analysts have assigned a 90% likelihood of approval, while crypto market participants hold a slightly more conservative estimate at 85%. Notably, the recent rally in Bitcoin’s price further underscores the positivity among investors.
Multiple Bitcoin ETF applicants have seized the opportunity to promote Bitcoin and their yet-to-be-approved Bitcoin ETFs through advertising. If these ETFs receive the green light, they will be listed on U.S. stock exchanges, potentially attracting retail and institutional investors by eliminating the need for separate accounts and wallets on cryptocurrency exchanges.