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The U.S. Securities and Exchange Commission (SEC) is joining forces with the Federal Bureau of Investigation (FBI) to investigate a misleading post on its social media account regarding the approval of spot Bitcoin ETFs. This incident, which stirred significant market confusion, involved a false statement disseminated through the SEC’s account, falsely claiming the approval of Bitcoin ETFs on registered securities exchanges.
The Incident and Immediate Response
The inaccurate post, which appeared on the SEC’s social media platform around 4 p.m. ET on Tuesday, reached the agency’s extensive follower base. It inaccurately announced the SEC’s approval for the listing of spot Bitcoin ETFs. SEC Chair Gary Gensler promptly addressed the issue through his account, clarifying that no such approval had been granted. The timing of the false post was critical, coinciding with the anticipation of an actual decision by the SEC on a spot Bitcoin ETF, which many analysts expected later in the day.
Responding to the situation, the SEC spokesperson confirmed the ongoing investigation and the agency’s collaboration with law enforcement, including the SEC’s Office of the Inspector General and the FBI. The spokesperson emphasized the commitment to providing updates as appropriate and reiterated that any official actions on exchange rule filings would be communicated through the SEC’s website and the Federal Register.
Lawmakers Demand Probe into SEC Social Breach
The social media platform acknowledged the security breach, which revealed that the compromise stemmed from unauthorized access to a phone number linked to the SEC’s account. Notably, the account lacked two-factor authentication at the time of the incident, which raised questions about the SEC’s digital security measures.
This security lapse has not gone unnoticed by lawmakers. Representative French Hill expressed his concerns, labeling the incident a significant technological vulnerability in Washington and a low point for the SEC. He, along with House Financial Services Committee Chair Patrick McHenry and other members, announced plans to send a letter to Gensler seeking a thorough investigation into the breach.
Senator Cynthia Lummis also weighed in on the matter, highlighting the potential market manipulation implications of fraudulent announcements like those posted on the SEC’s social media account. She called for transparency in understanding the events that led to this security breach.
Potential Legal Repercussions and Market Impact
The false announcement’s potential to mislead investors and manipulate the market has sparked discussions about the legal implications for the SEC. The incident raises questions about the agency’s responsibility in safeguarding its digital platforms against such breaches, especially given the significant influence of its communications on financial markets.
Legal experts speculate that the incident could increase scrutiny of the SEC’s cybersecurity measures and possibly result in legislative action to bolster digital security across government agencies. The occurrence also underscores the importance of robust security protocols for official communication channels in the digital age.
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