A Hack of the S.E.C.’s Social Media Account Caused a Bitcoin Frenzy, Briefly

 Intricacies Unveiled: A Cryptic Tale of Cryptocurrency Unraveling

The Securities and Exchange Commission's enigmatic account, referred to as X, made an announcement that reverberated through the corridors of the cryptocurrency realm—a purported endorsement of an investment vehicle tethered to Bitcoin. Yet, veracity eluded the proclamation.

For a fleeting 15 minutes, the cryptocurrency landscape basked in euphoria.

At 4:11 p.m. on a consequential Tuesday, the official X account of the Securities and Exchange Commission proclaimed regulatory approval for a novel investment instrument mirroring Bitcoin's price—a seeming triumph for crypto proponents amidst adversity. Coinbase, a colossal crypto exchange, adorned its virtual domain with a jubilant banner. Leaders of the crypto domain hailed it as an epochal moment. Bitcoin's valuation experienced an abrupt surge.

However, at 4:26 p.m., Gary Gensler, the chair of the S.E.C., shattered the jubilation, asserting that the agency's account had fallen prey to a breach, birthing an "unauthorized tweet." An S.E.C. spokesperson affirmed the intrusion through an emailed communiqué.

This breach marked the latest convolution in the protracted pursuit within the crypto sphere for an investment instrument christened an exchange-traded fund (ETF) entwined with Bitcoin's valuation. Since the autumn season, enthusiasts had been counting down to the Jan. 10 deadline, anticipating the S.E.C.'s verdict on allowing a Bitcoin ETF. Bitcoin's valuation had soared over 60 percent in recent months, fueled by burgeoning optimism surrounding imminent approval.

An announcement had been widely anticipated this week, with financial juggernauts like BlackRock and Fidelity poised to unveil Bitcoin products. Social media buzzed with conjecture about the precise timing of approval, engendering memes about once-obscure S.E.C. procedures and propelling ETF analysts to online stardom.

However, the industry's anticipations must be deferred.

"The S.E.C. has not approved the listing and trading of spot bitcoin exchange-traded products," articulated Mr. Gensler in his digital missive.

The identity of the intruder who infiltrated the S.E.C.'s X account remains shrouded in mystery. Yet, X's corporate safety enclave disseminated a statement asserting that the hacker had gained "control over a phone number" associated with the S.E.C.'s official handle on the site. The statement highlighted the S.E.C.'s omission of two-factor authentication, a commonplace security measure demanding an additional layer of verification for online account access.

A representative for X did not promptly respond to a request for commentary.

The prospect of a Bitcoin ETF has held crypto enthusiasts in thrall for over a decade. An ETF represents a diversified portfolio of assets, with shares trading on traditional exchanges such as Nasdaq. Investors in a Bitcoin variant would possess a slice of a portfolio housing Bitcoin, mitigating some risks linked to direct cryptocurrency acquisition.

Crypto aficionados have long aspired to witness the approval of this financial instrument, anticipating an influx of billions into the industry. This surge would attract wealth managers who had hitherto hesitated to channel client funds into the volatile crypto domain.

For years, the S.E.C. resisted industry appeals, contending that the crypto market was susceptible to manipulation. However, in August, the agency suffered a legal setback against one of the firms vying to launch the Bitcoin fund, paving the way for its potential approval.

This legal victory emerged as a rare glimmer amidst the gloom engulfing the crypto realm. Since mid-2022, crypto valuations have plummeted, and several major entities have succumbed to insolvency, prompting legal actions. Mr. Gensler has spearheaded the charge against the industry, instituting lawsuits against prominent entities like Coinbase and its foremost international counterpart, Binance.

Thus, when the social media post surfaced on the S.E.C.'s official X account late Tuesday afternoon, the crypto industry was poised for celebration. A concise statement adorned the space above a thumbnail image of Mr. Gensler.

"Today, the S.E.C. grants approval for Bitcoin ETFs for listing on all registered national securities exchanges," proclaimed the post. "The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection."

Bitcoin's valuation momentarily soared to nearly $48,000 before retreating closer to $45,000 after the S.E.C. divulged the breach.

Stephanie Allen, an agency spokesperson, disclosed that "an unknown party" had infiltrated the S.E.C.'s account briefly after 4 p.m.

"That unauthorized access has been terminated," she affirmed. "The S.E.C. will collaborate with law enforcement and our governmental partners to scrutinize the incident and determine appropriate next steps regarding both the unauthorized access and any associated misconduct."

On social media, digital sleuths disseminated screenshots showcasing that the compromised S.E.C. account had engaged with diverse crypto-related posts. Cameron Winklevoss, a luminary of the crypto firm Gemini, accused the agency of "manipulating markets and hurting U.S. investors."

"The S.E.C. would demand accountability from a public company if they made such a colossal market-moving mistake," asserted Senator Bill Hagerty, a Republican from Tennessee. "Congress needs answers on what just happened."