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SEC Social Media Scandal: Fake Bitcoin ETF Approval Rocks Cryptocurrency Markets

On Tuesday, the U.S. Securities and Exchange Commission (SEC) revealed that an imposter disseminated a counterfeit announcement via its platform X social media channel. This fabricated post falsely claimed that the SEC had greenlit the much-discussed spot bitcoin exchange traded funds.

Clarifying the situation, an SEC representative affirmed that the regulatory body has yet to grant approval for spot bitcoin ETFs. The spokesperson conveyed concerns that the agency's social media presence had been compromised but refrained from divulging further specifics.

The misleading announcement on platform X, previously recognized as Twitter, asserted that the SEC had endorsed bitcoin ETFs across all accredited national securities exchanges. This deceptive message even purported to cite statements from SEC Chair Gary Gensler. Subsequently, major news outlets, including Reuters, echoed this misinformation, triggering a surge in bitcoin's valuation.

This deceptive revelation emerged amidst widespread anticipation that the SEC would potentially greenlight a series of ETFs mirroring bitcoin's valuation by Wednesday—a milestone event for the burgeoning cryptocurrency sector. The unforeseen post sent shockwaves across the industry, prompting stakeholders to validate its authenticity and question the SEC's unconventional communication approach.

Several ETF issuer executives, preferring anonymity due to the topic's delicate nature, expressed astonishment and concern regarding the initial social media post. One high-ranking executive voiced apprehension about potential delays or denials in spot bitcoin ETF approvals stemming from this breach.

Anthony Tu-Sekine, an esteemed attorney affiliated with Seward & Kissel, downplayed the incident's impact on impending approvals. He articulated bewilderment regarding the motive behind such a deceptive act, especially when market consensus leaned towards an approval. "The rationale remains elusive," Tu-Sekine remarked.

By 4:11 PM ET, the spurious post on the SEC's platform X had garnered over a million impressions. Astonishingly, within a mere span of 20 minutes, the post vanished, indicating its deletion.

Following this misleading information, bitcoin's valuation momentarily surged to approximately $48,000 before experiencing a swift downturn to below $45,000. Ultimately, the cryptocurrency settled at a 3.15% decline, resting at $45,513, after the SEC disclaimed and retracted the fraudulent content. Contrary to expectations, some market analysts predicted a decline in bitcoin's price despite its prior ascent of over 70% in anticipation of regulatory approval.

The SEC remained reticent regarding potential investigative actions or the ramifications of this breach on forthcoming approvals. Historically, the SEC has rebuffed all spot bitcoin ETF proposals due to apprehensions surrounding market manipulation.

Instances of social media account compromises, whether through password breaches or deceptive tactics, persist across platforms like platform X. A pertinent example from 2020 underscores this vulnerability when a young hacker infiltrated platform X's internal infrastructure, commandeering numerous prominent accounts to orchestrate a cryptocurrency scheme.

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