Blockchain Director Doubts SEC's Role in Crypto Market-Stirring Tweet
Summary:
A dubious tweet shook the crypto market on January 9; although many suspected it was issued by the U.S. Securities and Exchange Commission (SEC), the Blockchain Association director, Ron Hammond, believes otherwise. He hypothesizes that the tweet, announcing spot Bitcoin exchange-traded funds' approval, was not from the SEC, attributing the misinformation to a security breach. In the tweet's aftermath, several U.S. lawmakers requested an inquiry into the SEC's security practices, while Bitcoin ETFs listed on U.S. exchanges resulted in over $1 billion inflow to cryptocurrency projects by January 12.
A deceptive message disseminated on social media platform X (renamed from Twitter) stirred the cryptocurrency market on January 9, but a prominent figure from the Blockchain Association suspects it wasn't sent by the U.S. Securities and Exchange Commission (SEC). This was revealed by Ron Hammond, the Blockchain Association's director of government relations, in a thread created on X on January 16. He dismissed the notion that the SEC was responsible for a post declaring the sanction of a spot Bitcoin (BTC) exchange-traded fund, a message the SEC later dismissed as a "fraud". There was widespread conjecture online that an official from the SEC may have let slip the ETF announcement a day before it was formally lodged on January 10.
Hammond expressed, “Upon hearing that the post was a mistake, many in DC instantly deduced it as a communication error. For important updates like the ETF news, usually agencies/firms will devote significant time honing their announcements. It wouldn't be outlandish for someone to mistakenly hit send.” He further noted that numerous identifiers linked to the misleading announcement did not correlate with the typical communication style of the SEC, such as use of the Bitcoin logo and unconventional graphics, leading him to believe the SEC was not involved.
The false tweet released on January 9 about the sanctioning of spot Bitcoin ETFs had given a misguided signal to the launch of multiple such ETFs, leading SEC chair Gary Gensler and the SEC to clarify that their X account was "compromised". Only on January 10 did X’s safety page alert users that the SEC had not implemented multi-factor authentication. Hammond commented, "Whoever had intruded into the account chose to exploit this time, and the amount of effort implies numerous uncertainties. The SEC started on the backfoot when it was revealed they had not set up two-step verification.”
Following the tweet that torpedoed the market, numerous U.S. politicians requested an investigation into the commission's protocols. Senators Ron Wyden and Cynthia Lummis penned a letter to SEC Inspector General Deborah Jeffrey on January 11, labeling it as "unforgivable" that the commission neglected its own protection measures. The FBI has now been recruited by the SEC to probe the cyber intrusion.
After several Bitcoin ETF shares were listed, U.S. marketplaces saw an influx of over $1 billion into cryptocurrency-related offerings for the week ending on January 12. Back in October 2021, SEC's endorsement of ETFs linked to Bitcoin futures led to approximately $1.5 billion in capital inflows in the first week of trade.
Published At
1/16/2024 11:31:49 PM
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