Fake Tweet Shakes Crypto Market: SEC Denies Responsibility

The Fake Tweet Controversy: On January 9th, a tweet falsely announcing the approval of a Bitcoin Exchange-Traded Fund (ETF) sent shockwaves through the cryptocurrency world. The tweet claimed that the SEC had given the green light to a Bitcoin ETF, which the SEC officially approved on January 10th. However, Blockchain Association's Director of Government Relations, Ron Hammond, believes that this tweet was unlikely to be mistakenly published by the commission.

Suspicious Circumstances: Hammond pointed out that for significant events like the ETF announcement, agencies usually spend hours perfecting tweets to ensure they make sense. He stated, "When this news came out, it was a false tweet. Many in the D.C. area immediately thought it was a communication error. For major events like ETF announcements, agencies/firms usually spend hours crafting tweets to avoid the idea that someone accidentally hit 'send.'"

Not SEC's Style: Hammond also noted that various elements of the tweet did not align with the SEC's usual style, such as the Bitcoin logo, which was not typical, and the graphics were also non-standard. Thus, it is increasingly likely that the SEC was not behind this tweet.

SEC's Response: SEC Chairman Gary Gensler and the commission have clarified that the January 9th tweet, which suggested a "false start" for several spot Bitcoin ETFs, resulted from a "compromised" X account. On January 10th, the social media platform announced that it had not enabled two-factor authentication.

Calls for Investigation: Following the tweet that rocked the market, several U.S. lawmakers called for an investigation into the SEC's actions. Senators Ron Wyden and Cynthia Lummis sent a letter on January 11th to SEC Inspector General Deborah Jeffrey, labeling the commission's failure to follow security protocols as "inexcusable." The SEC is now coordinating with the Federal Bureau of Investigation to probe the hack.

Market Impact: Reportedly, after the listing of several Bitcoin ETF shares, American exchanges witnessed over $1 billion in cryptocurrency product inflows during the week ending January 12th. The approval of Bitcoin futures ETFs by the SEC in October 2021 led to approximately $1.5 billion flowing in during the first week of trading.