A new bitcoin investment was finally approved last night even as the FBI investigates a dramatic cyber security breach that sent shock waves through the ‘Wild West’ crypto- currency industry.
In a major embarrassment to the authorities, a hacker broke into the X account of the US Securities and Exchange Commission (SEC) and published a post on Tuesday night saying bitcoin had been granted a regulatory boost.
Minutes later, SEC chairman Gary Gensler corrected the record on his personal X account, saying the agency’s social media had been ‘compromised’ and the post on X was ‘unauthorised’.
But in a further twist last night, the regulator issued a fresh statement, saying the first so-called exchange-traded funds (ETFs) linked to bitcoin have been approved. The to-ing and fro-ing wreaked havoc on crypto markets.
Bitcoin hit a two-year high close to $48,000 after the fake tweet on Tuesday night before falling sharply after the clarification and rising again last night once approval was finally given.
Key decision: A bitcoin ETF has been heralded as a game-changer for the industry as it offers investors exposure to the world’s largest crypto-currency without needing to directly hold it
An investigation has been launched into how the SEC account was hacked.
In a statement last night, a spokesman for the regulator said: ‘The SEC continues to investigate the matter and is coordinating with appropriate law enforcement entities, including the FBI.’
And commenting on the approval given to the ETFs, Gensler said: ‘While we approved the listing and trading of certain spot bitcoin ETP shares today, we did not approve or endorse bitcoin.
Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.’
A bitcoin ETF has been heralded as a game-changer for the industry as it offers investors exposure to the world’s largest crypto-currency without needing to directly hold it.
Investment giants Blackrock and Fidelity back the idea, and plan to launch products.
But the cyber breach threatened to overshadow the decision and further undermined trust in the industry in the wake of scandals such as the collapse of crypto exchange FTX and the conviction of its founder Sam Bankman-Fried for fraud.
Rogue tweet: A hacker broke into the X account of the US Securities and Exchange Commission and posted that bitcoin had been granted a regulatory boost
It is also highly embarrassing for X, its boss Elon Musk, the SEC and Gensler.
Kurt Gottschall, a former SEC regional director, said: ‘The irony here is that the SEC has not shown much sympathy to public companies and asset managers that have experienced cyber-security incidents.’
Gensler, 66, who has run the SEC since 2021, once vowed that it would be the ‘cop on the beat’ policing the ‘Wild West’ of the crypto-currency industry.
He has filed dozens of lawsuits, including against exchanges binance and coinbase.
US politicians seized on the security glitch as an opportunity to take a swipe at the agency.
‘It is unacceptable that the agency entrusted with regulating the epicentre of the world’s capital markets would make such a colossal error,’ said US Republican senator James David Vance.
Hack deals new blow to Musk at troubled X
Security breach: X owner Elon Musk
Elon Musk-owned X faces fresh questions over its reliability as a source of information after the hack sent bitcoin into a frenzy.
Analysts said the security glitch – one of the most high-profile breaches on the platform in years – was another ‘black eye’ for the struggling company and its eccentric owner.
X, formerly known as Twitter, insisted that the ‘compromise’ of the SEC account ‘was not due to any breach of X’s systems’.
Pointing the finger at the SEC, its ‘safety’ team said the false post occurred after a fraudster gained control of the phone number connected to the account, and that the SEC did not have a two-factor authentication, which would have provided added protection.
But the incident has fuelled concerns about X’s safety controls and content moderation since Musk’s controversial £35billion take-over in 2022. This came to a head in November last year when advertisers started to boycott it over reports of anti-semitic content.
Musk responded by telling advertisers: ‘Go f*** yourself.’
Now some experts fear a further headache for Musk, who also runs car giant Tesla and satellite maker Space X. ‘This has to be the most sophisticated use of a stolen Twitter account ever,’ said cyber-security analyst and former Meta security chief Alex Stamos.
‘At a minimum, this indicates that the hollowed-out Twitter team can’t keep up with advances in account takeover techniques.’
Now some experts fear a further headache for Musk, who also runs car giant Tesla and satellite maker Space X. ‘This has to be the most sophisticated use of a stolen Twitter account ever,’ said cyber-security analyst and former Meta security chief Alex Stamos.
‘At a minimum, this indicates that the hollowed-out Twitter team can’t keep up with advances in account takeover techniques.’
