A Hacked SEC Twitter Account Sent Bitcoin on a Wild Round Trip

On January 9, 2024, the official SEC Twitter account posted that spot Bitcoin ETFs had been approved — an announcement the market had been anxiously anticipating for weeks. Bitcoin instantly surged past $47,500 in response.

The catch: the post, later deleted, hadn't come from the SEC at all. It was published by whoever had compromised the account — presumably someone holding a sizable long position.

Minutes afterward, SEC Chair Gary Gensler, posting from what appeared to be his legitimate account, set the record straight:

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.

The reversal was swift: Bitcoin fell roughly 5% within about 15 minutes of the correction.

Between the false pump and the subsequent dump, CoinGlass data shows the whipsaw triggered more than $200 million in combined long and short liquidations.

A regulator inadvertently causing a market-wide pump-and-dump is an awkward look for an agency whose stated mission includes protecting investors — particularly one that had previously reminded the public to be skeptical of unverified information, yet apparently couldn't secure two-factor authentication on its own social account.

Careful what you read on the internet. The best source of information about the SEC is the SEC.

The irony of that particular past statement wasn't lost on observers.

This wasn't the first time ETF speculation had rattled the market. Back in October, Cointelegraph published an unverified report claiming BlackRock's iShares ETF had received SEC approval, triggering over $100 million in liquidations as the false news pumped and then reversed the market.

More recently, a headline from The Block suggesting ETF applications would be rejected in January turned out to be based on a single analyst's opinion. That analyst's firm, Matrixport, had itself forecast Bitcoin reaching $50,000 in January just a day earlier — and its CEO subsequently distanced himself from the roughly $600 million in long positions wiped out in the fallout.

Anticipation was already running high heading into this week, especially after Gensler's own thread seemed to hint approval was close at hand — which is likely why so many traders bought first and asked questions later when the fake announcement appeared.

Sharp-eyed observers noticed unusual behavior on the SEC's account before the official correction was even posted, tipping off that something was wrong.

Regardless of when the ETFs ultimately get approved, this episode has dented the SEC's credibility and undercut Gensler's typically combative posture toward the crypto industry. If Gensler wants the public to prioritize security, he might revisit his own past advice on the subject.

Even Coinbase couldn't resist twisting the knife, offering to help the regulator shore up its security practices.

It's an easy and fitting irony to mock — a regulatory body pumping and dumping the market harder than the industry it oversees — yet some commentators still tried to pin blame on crypto itself. Meanwhile, plenty of traders were simply focused on whether to buy the dip or sell the rip.

US senators, however, weren't in a joking mood:

Just like the SEC would demand accountability from a public company if they made such a colossal market-moving mistake, Congress needs answers on what just happened. This is unacceptable.

Whether the SEC will be compelled to investigate its own security lapse remains to be seen.