Lawyers, politicians call for investigation of SEC over Bitcoin ETF post

Charles Gasparino of Fox Business said he’s been told by securities lawyers that the SEC “will have to investigate itself” for alleged market manipulation.

United States lawyers and senators have called on Congress to demand an investigation into the U.S. Securities and Exchange Commission after its X (formerly Twitter) account was reportedly compromised and falsely reported news that the spot Bitcoin (BTC) exchange-traded funds (ETF) were approved.

“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,” said U.S. Senator Bill Hagerty in a Jan. 9 X post.

U.S. Senator Cynthia Lummis also demanded the SEC offer some transparency into the events that led to the false post.

Fraudulent announcements, like the one that was made on the SEC’s social media, can manipulate markets. We need transparency on what happened.

— Senator Cynthia Lummis (@SenLummis) January 9, 2024

Charles Gasparino of Fox Business said he’s been told by securities lawyers that the SEC “will have to investigate itself” for market manipulation.

BREAKING: Securities lawyers tell @FoxBusiness the @SECGov will have to investigate itself for market manipulation after moving the price of $BTC up and down following the hacked tweet that it had approved the first spot BTC ETF and then saying it was fake. That said, for the SEC…

— Charles Gasparino (@CGasparino) January 9, 2024

Concerns were flagged by U.S. Representative Ann Wagner, who referred to the incident as “clear market manipulation” that impacted millions of investors.

“I plan to get more answers from Chair Gensler on this incident,” Wagner added.

Chair @GaryGensler,

Does this mean we can blame more of the @secgov’s horrible rulemaking and so-called regulation by enforcement on a “compromised account”? #askingforafriend

Sincerely,

Chairman of the House Financial Services Oversight and Investigations Subcommittee pic.twitter.com/THqZ2PlVle

— Rep. Bill Huizenga (@RepHuizenga) January 9, 2024

Bloomberg ETF analyst James Seyffart suggested that SEC Chair Gary Gensler would be furious with the staff member responsible for the alleged security breach.

“Gary is gonna want someone’s head to roll for this. (Honestly i would too if i were him).”

Others, such as investment manager Timothy Peterson of Cane Island Alternative Advisors, claimed that the SEC’s security breach was a potential market manipulation event, which is exactly what the commission is supposed to protect investors against.

“How can @SECGov protect hundreds of millions of investors when it can’t even protect its own social media account,” said Peterson.

Today, the @SECGov showed what it does best: Manipulating markets and hurting US investors.

— Cameron Winklevoss (@cameron) January 9, 2024

“I’m not pointing fingers, but somebody’s negligence in your organization just wrecked some real live investors,” added U.S lawyer James (MetaLawMan) Murphy in a post directed at Gensler.

X Safety — an account controlled by X — which had been investigating the incident, later confirmed the SEC’s account was compromised due to an unidentified individual obtaining control over a phone number associated with the SEC account via a third party.

X Safety added that SEC’s X account was not secured by two-factor authentication at the time it was compromised.

Bitcoin advocate Layah Heilpern noted the SEC’s false post stayed up for 20 minutes before it was taken down and amassed at least 4.4 million views in that timeframe.

“This is absolute market manipulation,” Heilpern claimed.

Related: Spot Bitcoin ETF incoming? Outcomes investors may see from the SEC this week

The SEC hasn’t provided additional detail about how its X account was compromised but has denied its staff was involved in publishing the unauthorized tweet.

Despite the news, Bloomberg ETF analyst Eric Balchunas said he’s still looking for official approval of the spot Bitcoin ETFs sometime between 4:00 pm to 5:00 pm Eastern Time (9:00 pm to 10:00 pm UTC) on Jan. 10.