The U.S. Securities and Exchange Commission (SEC) is under investigation for suspected market manipulation after a misleading announcement regarding the approval of Bitcoin Spot ETFs. Reports initially suggested the SEC’s endorsement of certain Bitcoin ETF funds, causing Bitcoin’s price to surge above $47,000 before stabilizing around $45,000.
BREAKING: Securities lawyers tell @FoxBusiness the @SECGov will have to investigate itself for market manipulation after moving the price of $BTC up and down following the hacked tweet that it had approved the first spot BTC ETF and then saying it was fake. That said, for the SEC…
— Charles Gasparino (@CGasparino) January 9, 2024
In a concerning turn of events, individual X accounts were compromised, disseminating false information through posts claiming swift approval for Bitcoin ETF funds. U.S. attorneys and senators are urging Congress to investigate the SEC’s potential market manipulation in response to this breach.
The fraudulent SEC post, visible over 4 million times within its 20-minute existence, fueled market uncertainty. The SEC promptly removed the misleading information, prompting legal experts to indicate that the SEC must now initiate a self-investigation into the alleged market manipulation.
SEC Bad Handling Of The Case
According to insights from securities lawyers shared on Fox Business, the SEC’s handling of the situation is unprecedented.
While the SEC has never rejected ETF applications that have progressed to this stage, the market impact of the false information resulted in a Bitcoin price fluctuation, causing an estimated $31 billion loss—exceeding the market capitalization of the 250 lowest constituents in the S&P 500 and approaching the size of the FTX bankruptcy.
The @SECGov false information caused a #Bitcoin market price fluctuation – largely a loss – of about $31 billion. That's larger than the market capitalization of each of the 250 bottom S&P 500 stock constituents. It is also roughly the size of the #FTX bankruptcy. pic.twitter.com/GOYcDVPHFn
— Timothy Peterson, CFA CAIA (@nsquaredcrypto) January 9, 2024
Notable figures in the crypto space, including @nsquaredcrypto, highlighted the substantial financial impact caused by the misinformation. Despite the setback, optimism persists as industry insiders, such as @ericbalchunas, anticipate potential approval in the near future, suggesting a launch by Thursday.
But no worries, we are looking for approval tomorrow bt 4-5pm and launches on Thursday.
— Eric Balchunas (@EricBalchunas) January 9, 2024
The SEC’s role in this incident underscores the challenges and risks associated with the intersection of traditional regulatory bodies and the dynamic cryptocurrency market, prompting calls for increased scrutiny and accountability.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.