For a regulatory body with securities literally in its name, the US Securities and Exchange Commission (SEC) would be wise to brush up on its internet safety procedures.
It turns out that an unauthorised Tweet from the watchdog’s X account, which falsely announced the approval of a spot-bitcoin exchange-traded fund, was made possible due to the SEC’s failure to implement two-factor authentication.
According to a note posted by X’s safety page and retweeted by Elon Musk: “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 associated with the @SECGov account 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.”
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
The false approval sent the bitcoin markets into a tizzy, with the BTC/USD pair tumbling from a 22-month high of nearly $48,000 on Monday to less than $45,000 at the time of writing.
“The @SECGov twitter account was compromised, and an unauthorized tweet was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products,” SEC boss Gary Gensler wrote on his private X account.
Embarrassingly for Gensler, he has previously warned of the dangers of not using two-factor authentication.
This is a reminder to secure your financial accounts as well as protect against identity theft and fraud.Remember to:
????Use strong passphrases or passwords
????Set up multifactor authentication
????Keep account alerts turned on#CybersecurityAwarenessMonthhttps://t.co/qitGkujLxD
— Gary Gensler (@GaryGensler) October 24, 2023
But the debacle also serves as a warning on the relative immaturity of bitcoin as an asset class, with traders easily swayed by a mere Twitter/X post.
Nonetheless, spot bitcoin ETFs are expected to gain approval through the SEC in the coming days, a development which bitcoin bulls have long been anticipating.