SEC Chair Gary Gensler. Source: screenshot of a YouTube video / Yahoo Finance

The official X account of the U.S. Securities and Exchange Commission (SEC) was compromised when it posted the fake spot Bitcoin ETF approval announcement, X has confirmed.

SEC’s Account did not Have a 2FA Set Up

Upon completing a preliminary investigation, X confirmed that the compromise did not stem from any vulnerability in their systems. Instead, an unidentified individual gained control over a phone number associated with the SEC account through a third party.

We can confirm that the account @SECGov was compromised and we have completed a preliminary investigation. Based on our investigation, the compromise was not due to any breach of X’s systems, but rather due to an unidentified individual obtaining control over a phone number…

— Safety (@Safety) January 10, 2024

It was also revealed that the account lacked two-factor authentication (2FA) at the time of the breach, emphasizing the importance of users enabling this additional security layer.

Despite assurances from X regarding the source of the compromise, concerns were raised by U.S. senators and representatives, labeling the incident as a potential case of market manipulation. U.S. Senator Bill Hagerty decried the situation as “unacceptable,” demanding accountability similar to what the SEC would expect from a public company making a significant market-moving error.

Just like the SEC would demand accountability from a public company if they made such a colossal market-moving mistake, Congress needs answers on what just happened. This is unacceptable. https://t.co/tWtLqHtqpu

— Senator Bill Hagerty (@SenatorHagerty) January 9, 2024

SEC Faces Scrutiny From Lawmakers

U.S. Senator Cynthia Lummis echoed the sentiment, urging the securities regulator to provide transparency into the events leading to the false post. Charles Gasparino of Fox Business had suggested that the SEC might have to investigate itself for market manipulation. U.S. Representative Ann Wagner went further, describing the incident as “clear market manipulation” impacting millions of investors and expressing her intent to seek answers from SEC Chair Gary Gensler.

Investment manager Timothy Peterson criticized the SEC’s ability to safeguard investors, highlighting the irony of an organization tasked with protecting investors failing to secure its own social media account. As theories circulated on social media, some speculated on a possible fat-finger error from SEC staff.

Analysts believe that this security lapse won’t be a reason in the dealying of spot Bitcoin ETF approval that is expected to happen late on Wednesday.

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