The price of Bitcoin experienced wild swings today after the official Twitter account of the US Securities and Exchange Commission (SEC) was hacked and a fraudulent tweet was posted at 4:11PM EST on Tuesday, announcing approval of a spot Bitcoin exchange-traded fund (ETF).

15 minutes later, SEC chair Gary Gensler issued a statement warning that the agency’s account had been compromised, resulting in an “unauthorized tweet,” and denying any approvals had been granted, sending Bitcoin’s price tumbling after the initial surge.

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.

— Gary Gensler (@GaryGensler) January 9, 2024

Bitcoin’s price spiked from around $46,600 to $47,680 following the fake SEC tweet, marking what appeared to be a two-year price high for the leading cryptocurrency, according to data from CoinGecko. However, Bitcoin’s price plunged nearly $45,500 after Gensler quickly confirmed that regulators “have not approved the listing and trading of spot Bitcoin exchange-traded products.”

Charles Gasparino Senior Correspondent at FOX Business Network tweeted:

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

While the SEC is expected to approve spot Bitcoin ETFs this Wednesday, with the first Bitcoin ETF potentially starting trading as soon as Thursday according to some analysts, Tuesday’s fake tweet and rapid market reaction demonstrated the SEC’s outsized influence and Bitcoin’s continued price sensitivity.

Crypto markets remain largely unregulated, contributing to extreme volatility. But regulators wield significant power through signals around support or opposition. According to CoinGecko, bitcoin’s price remains up 8% over the past two weeks and 166% over the past year even following today’s movements.

Rumors and speculation related to Bitcoin ETF approvals have whipsawed crypto prices before. But coming from an official government Twitter account, traders reacted instantly to buy Bitcoin at higher prices, showcasing vulnerabilities where regulatory decisions and announcements meet new digital asset trading dynamics.

The hacking incident and its market impact did not go unnoticed in Washington. Prominent political figures have voiced their concerns and called for a thorough investigation.

Senator Cynthia Lummis, a US Senator from Wyoming, expressed concerns about market manipulation resulting from such fraudulent announcements.

Fraudulent announcements, like the one that was made on the SEC’s social media, can manipulate markets. We need transparency on what happened.

— Senator Cynthia Lummis (@SenLummis) January 9, 2024

Similarly, Senator Bill Hagerty from Tennessee stressed the need for accountability, drawing parallels with the standards expected of public companies.

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

Additionally, Rep. Bill Huizenga, Chairman of the House Financial Services Oversight and Investigations Subcommittee, questioned the broader implications of the SEC’s actions in his tweet:

Chair @GaryGensler,

Does this mean we can blame more of the @secgov’s horrible rulemaking and so-called regulation by enforcement on a “compromised account”? #askingforafriend

Sincerely,

Chairman of the House Financial Services Oversight and Investigations Subcommittee pic.twitter.com/THqZ2PlVle

— Rep. Bill Huizenga (@RepHuizenga) January 9, 2024