Citing the risk that investors face from market manipulation, the Securities and Exchange Commission (SEC) rejected the initial application for a spot bitcoin exchange-traded fund (ETF) almost seven years ago. It would become a recurring theme for the innumerable rejections that followed.
The regulator needs to provide an explanation.
The fake tweet on Tuesday from the SEC’s official X (formerly Twitter) account sent the price of bitcoin into a sharp upswing before it crashed as traders attempted to interpret the seeming approval. It appears that the influential regulator has just approved all potential applications for BTC ETFs, giving bitcoin speculators their much-needed victory a full day ahead of schedule.
The odd post, which included a $BTC cashtag, was obviously a fake. In a matter of minutes, SEC chairman Gary Gensler tweeted from his personal account that nothing had been approved. The response saw the bitcoin markets continue to plummet abruptly.
Markets can be manipulated by false statements, such as the one posted on the SEC’s social media accounts. Senator Cynthia Lummis (R-Wyoming) tweeted, “We need transparency on what happened,” following the SEC’s confirmation that its account had been “compromised.”
It was a remarkable turn of events in what many believed to be the last hours of the SEC’s resistance to the spot bitcoin exchange-traded fund.
The statements made by the SEC itself encouraged traders to overreact to this kind of false information. The regulator tweeted in mid-October, saying, “Be careful with what you read online. In response to a retracted CoinTelegraph tweet indicating that BlackRock’s bitcoin ETF application had been approved, the tweet read, “The best source of information about the SEC is the SEC.”
The first half of that tweet was still credible on Tuesday, but the second half had devolved into absurdity. As numerous analysts have shown, one cannot even trust the SEC given the SEC’s current practices.
CoinDesk was informed by an SEC representative last week that the agency would first post any decisions on its own private EDGAR database. Naturally, on Tuesday, the general public and even knowledgeable observers disregarded this advice.
Does this imply that further of the @secgov’s appalling regulations and purported enforcement of rules may be attributed to a “compromised account”? In reaction to Gensler, Rep. Bill Huizenga tweeted.
Beyond the sheer joy of irony, the SEC’s allegedly compromised account prompted uneasy inquiries about the extent to which the regulator took its duty to safeguard itself in order to safeguard investors seriously (although it’s not known how precisely the X account was breached).
Soon after the incident, the regulator stated that the SEC would investigate the matter and decide on the best course of action regarding the illegal access as well as any connected misbehavior. The SEC will collaborate with law enforcement and our colleagues throughout government in this endeavor.
