Fake SEC Tweet Triggers over $200 Million in Liquidations Amidst Spot ETF Approval Rumors

In a surprising twist, the cryptocurrency community is grappling with uncertainty after a deceptive tweet from the official X account of the U.S. Securities and Exchange Commission (SEC) late Tuesday. 

Notably, it all started when hackers allegedly accessed SEC’s X account posting a notice falsely asserting the approval of Bitcoin ETFs and later tweeting out “$BTC”. The post was deleted almost immediately, prompting SEC Chair Gary Gensler to address the situation on his personal account. Gensler revealed that the agency’s account had been “compromised, and an unauthorized tweet was posted.”

In a subsequent post, the SEC reiterated Gensler’s statement, emphasizing that the deceptive announcement did not have official backing.

X later confirmed the incident, revealing that it resulted from an individual gaining control over an SEC account-linked phone number through a third party. “We can also confirm that the account did not have two-factor authentication enabled at the time the account was compromised,” said X.

That said, the false announcement, triggered a swift market reaction, with Bitcoin’s price experiencing a sudden surge to $47,933 and subsequent drop to $44,800 as traders tried to decipher the information. Notably, this turmoil led to the liquidation of a staggering 70,744 traders in the past 24 hours, resulting in a total liquidation amount of $225.39 million, as per the latest data by Coinglass.

Additionally, $84 million worth of Bitcoin long and short positions found themselves closed indefinitely in the process. Liquidation occurs when an exchange compels the closure of a trader’s leveraged position when the trader’s initial margin experiences either a partial or complete loss.

This incident raised concerns within the cryptocurrency community, highlighting the vulnerability of official channels to misinformation. Some crypto market participants criticized the SEC’s seemingly lax security measures, prompting concerns about the regulator’s ability to safeguard trillion-dollar markets.

Ripple’s Chief Legal Officer Stuart Alderoty emphasized the need for accountability and invoked the SEC’s own rules, calling for disclosure within four days regarding the incident’s nature, scope, and impact.

Crypto-friendly lawmaker Senator Cynthia Lummis also commented, expressing concerns about the potential market manipulation resulting from fraudulent announcements like the one on the SEC’s social media and stating, “We need transparency on what happened.”

That said, the incident adds an extra layer of uncertainty to the crypto market, especially with a crucial decision on thirteen proposed Bitcoin ETFs expected on Wednesday. Bloomberg analysts estimate the approval odds at 90%, while crypto market bettors place the odds slightly lower at 85%.

At press time, Bitcoin was trading at $45,328, reflecting a 2.09% drop over the past 24 hours.