Cryptocurrency investors were given false hope today that the U.S. Securities and Exchange Commission had approved bitcoin exchange-traded funds after the official SEC X Inc. (Twitter) account was allegedly compromised and a tweet appeared saying that approval had been given.

The compromised account tweeted, “Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges” and “the approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”

The tweet remained live for about 15 minutes before being deleted and replaced by a message stating that the account had been compromised and an unauthorized post was posted. “The SEC has not approved the list and trading of spot bitcoin exchange-traded products,” the new tweet added.

The @SECGov X account was compromised, and an unauthorized post was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.

— U.S. Securities and Exchange Commission (@SECGov) January 9, 2024

Rogue tweets promoting bitcoin scams are a dime a dozen on X, with accounts often compromised to promote scams as well, but this case is entirely different because the fake tweet was believable – the SEC is expected to rule on bitcoin ETFs this week.

Bitcoin ETFs are a type of investment fund that tracks the price of bitcoin and is traded on traditional stock exchanges rather than cryptocurrency exchanges, allowing investors to invest in bitcoin without holding actual cryptocurrency. A bitcoin ETF represents shares in a fund that has bitcoin as its primary asset, with investment values rising and falling in value in tandem with the changes in the price of bitcoin.

As noted last week, to date, the SEC has rejected multiple applications to launch bitcoin spot ETFs in recent years, citing underlying arguments that cryptocurrency markets are vulnerable to market manipulation. So far, the SEC has only approved ETFs tied to bitcoin and Ethereum futures contracts trading on the Chicago Mercantile Exchange.

The net result of the alleged account compromise was volatility in bitcoin markets. Coindesk reports that the rogue tweet resulted in the price of bitcoin jumping to $48,000 following the post before plummeting nearly 6%, to $45,100, when the news turned out to be false. The $48,000 figure was the highest bitcoin has traded since December 2021.

It’s also reported that the volatility wiped out more than $50 million in leveraged derivatives trading positions within an hour. The motivation behind the alleged compromise of the SEC account and fake tweet will likely be related to market manipulation of some sort, so it’s possible the SEC will now launch a serious investigation into who benefited from the fake tweet.

Photo: SEC/Flickr