Gensler says SEC’s X account ‘compromised,’ denies bitcoin product approved
The initial post set off a wave of excitement among crypto investors, underscoring the attention the SEC is getting as the agency weighs green-lighting what would be the first-ever bitcoin ETF in the U.S. — a pooled investment similar to a mutual fund that is likely to vastly expand trading in the cryptocurrency.
“It’s absolutely a big issue. It’s a highly anticipated, market-moving decision,” said Rebecca Fike, a former SEC enforcement attorney. “It’s not uncommon to get your news about what the SEC does through their Twitter feed.”
An SEC spokesperson said an “unknown party” had “unauthorized access to” the agency’s X account for “a brief period of time” around 4 p.m. The access has since been cut off, the spokesperson said, adding that the agency will work with law enforcement and other parts of the government to investigate. X is also investigating the hack, according to Joe Benarroch, head of business operations.
Several of the companies proposing to offer the products — which the SEC is expected to approve as soon as Wednesday — were caught off guard by the initial post. Trade organizations began to send a flurry of what turned out to be premature statements in reaction. And the price of bitcoin briefly jumped higher.
“What the hell?” a representative of one of the pending-ETF issuers said on a call with POLITICO, before the SEC publicly addressed the original post.
The hack is the latest reminder of the acute risk that
cybercriminals pose for Washington agencies like the SEC. The Wall Street regulator’s systems are stacked with confidential plans, rules and enforcement actions that could all send markets into a tizzy, as bitcoin was on Tuesday. The cryptocurrency rose to almost $48,000 on the original post after trading much of the day around $46,500.
“There’s an awful lot of efforts and resources that go into trying to protect the agencies, but they’re like everybody else,” said Jonah Crane, a former Treasury official who is now at Klaros Group. “It’s at some level a persistent game of whack-a-mole and it’s hard to be bulletproof.”
Congressional Republicans were quick to voice alarm. House Financial Services member Ann Wagner of Missouri said she is “deeply concerned” about the alleged hack, calling it “clear market manipulation.” Sen. Bill Hagerty of Tennessee, who sits on the Senate Banking Committee, called the SEC’s original post “unacceptable.”
“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,” Hagerty said on X.
About a dozen financial and crypto giants, including BlackRock, Fidelity and Grayscale, are awaiting final word from the agency on their applications to launch the products, a landmark moment that backers say will open the door for ordinary investors to tap into the world’s largest and oldest crypto token like never before.
Yet if approved, the bitcoin ETFs stand to become a new flashpoint in Washington’s regulation of the $1.7 trillion crypto market.
Many of Gensler’s allies, including progressive lawmakers and investor advocates, have pressed the agency in recent days on the dangers of signing off on the products. Their concerns revolve around wrapping what they say is an inherently risky asset — bitcoin — in an ETF, giving investors a false sense of security.
ETFs are investment vehicles that trade on regulated stock exchanges and are designed to track the price of an underlying asset. The SEC has repeatedly rejected bitcoin ETF applications over the last decade, often on the grounds that the underlying crypto market is at risk of becoming subject to manipulation. Last year, however, a federal court shot down the agency’s rejection of a bitcoin ETF bid from Grayscale, a leading crypto asset manager — giving the industry new hope.
If the SEC goes ahead with the bitcoin ETF approval on Wednesday, trading will likely kick off the next day. An executive at one of the issuers, who was granted anonymity because they were not authorized to speak publicly, said the SEC has told them it has no further comment on their application, indicating that approval is imminent.
Eleanor Mueller and Jasper Goodman contributed to this report.
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