All About the SEC Account Hack

The crypto market was in chaos on Tuesday 9th. This was caused by a fake X (Twitter) post from the SEC’s account claiming it had approved a spot bitcoin exchange-traded fund (ETF).

However, the SEC later claimed the post was “unauthorized” and its account had been hacked. If you aren’t familiar with what happened, here is a brief timeline.

False Alarm from The SEC’s X Account

The fake post read: “The SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges.” Interestingly, the post spiked Bitcoin’s price by over $1000, leading to hopes of further price surges.

Meanwhile, SEC Chair Gary Gensler took to his Twitter account to dismiss the news. He explained:

SEC had no 2FA Security Filter

Interestingly, X’s safety team provided clarity to the SEC’s hack in a post dated January 10. The team noted that the commission did not have two-factor authentication (2FA) activated on its main X account. So, this allowed a hacker to access it.

Furthermore, X’s safety page added that the SEC hack happened as a result of an unknown actor taking possession of the account’s phone number. And using it to access the SEC’s official X website. This form of attack is often known as a SIM swap hack.

US Lawmakers Demand an Explanation.

US lawmakers and politicians were outraged at the SEC’s inadequate security measures over its accounts, especially Republicans, who have long voiced dissatisfaction with how Gensler runs the agency.

Senators J.D. Vance and Thom Tillis expressed concerns about the SEC’s internal cybersecurity protocols in a letter they wrote to SEC Chair Gary Gensler yesterday. The letter said the situation was “antithetical to the Commission’s tripartite mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

Concerned about the latest intrusion, which they said caused “widespread confusion,” the two senators have asked the SEC to submit a report on the event to Congress, citing a rulemaking on cybersecurity disclosures that was recently enacted.

The senators wrote: “If this ‘compromised’ social media post was indeed a result of a cybersecurity attack, would it be possible for the Commission (SEC) to provide Congress with a report on the breach within four business days? If not, please explain why.”

Is This a Case of Market Manipulation?

There have been several claims that the fake post was a market manipulation scheme by the SEC. Interestingly, securities attorneys have allegedly informed Charles Gasparino of Fox Business that the SEC “will have to investigate itself” for market manipulation.

Representative Ann Wagner of the United States raised concerns about the incident, calling it “clear market manipulation” that affected millions of investors. “I plan to get more answers from Chair Gensler on this incident,” Wagner stated.

Timothy Peterson, an investment manager, claims that the SEC’s security violation may have been a case of market manipulation. This is exactly what the agency is meant to guard against.

Layah Heilpern, an advocate of Bitcoin, also made some observations. He noted that the SEC’s fake post received at least 4.4 million views in the twenty minutes it was live. Heilpern suggested that the move was pure market manipulation.”

What Are Other Possible Theories?

Crypto analysts and users have continued to post possible theories about the situation. Most agree that this could be an inside job. However, others believe it could have been caused by the SEC’s carelessness.

Others claim that the SEC’s use of the terms “compromised” and “unauthorized” implies that the account had not been compromised. Some claim that the regulator planned to send the post later.

Can This Delay the Big Announcement?

The SEC is set to investigate the embarrassing hack. However, crypto users have expressed concerns that this could delay the big announcement. However, some observers believe this is only a remote possibility. But, some believe the SEC could use this as a justification to postpone the decision past the January 10 date.

Dennis Porter, CEO of Satoshi Action Fund, provided another perspective. Porter explained in an email that “if the SEC is looking for ways to continue delaying the ETF process, it’s possible they could use this as a reason to slow down the rollout.”

Mati Greenspan of the finance firm Quantum Economics expects the SEC to leverage this moment to postpone a decision. He wrote, “I can certainly see a situation where the SEC would try to use this fiasco as a way to delay the ETF approval. It wouldn’t be the first time they’ve used underhanded methods to force their agenda on the markets.”

Some sources within the SEC have maintained that its employees had nothing to do with the posts. However, crypto users are eager to see how this plays out.

The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.


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