SEC Under Scrutiny: Lawyers Demand Bitcoin Manipulation Investigation After Hack

• SEC May Need to Investigate Self for Market Manipulation Following Bitcoin ETF Announcement Hack
• Hacked Announcement Causes Bitcoin's Price to Fluctuate
• Gensler's Response to The Hacked Announcement
• Effects on Bitcoin's Market Position
• Call for SEC to Investigate Its Own Practices
• SEC's Cybersecurity Risk Management Rules
• Uncertainty Surrounding Spot Bitcoin ETFs

SEC May Need to Investigate Self for Market Manipulation Following Bitcoin ETF Announcement Hack

Following the recent dramatic shift in Bitcoin$42,260 -0.64%'s price due to a hacking incident on the SEC's X account, securities lawyers argue that the SEC may need to initiate an investigation on its own practices for potential market manipulation.

Hacked Announcement Causes Bitcoin's Price to Fluctuate

The SEC's X account was compromised on a Tuesday afternoon, when a fraudulent message was posted claiming that the SEC had greenlit the listing of Bitcoin ETFs for all registered national securities exchanges. Shortly following the faux announcement, Chair of the SEC, Gary Gensler, clarified that the account had been hacked and the announcement was false.

Gensler's Response to The Hacked Announcement

"The SEC Twitter account was compromised, and an unauthorized tweet was posted," said Gensler. "The SEC has not approved the listing and trading of spot bitcoin exchange-traded products."

Effects on Bitcoin's Market Position

With the release of this unauthorized announcement, Bitcoin's price experienced significant volatility. At 4:15 PM ET, Bitcoin's price soared to $47,893, a near $1,000 increase from just minutes prior to the announcement. However, once the news was debunked, Bitcoin's price plummeted to under $46,000.

Call for SEC to Investigate Its Own Practices

Consequently, this has led to securities lawyers suggesting that the SEC must conduct an internal investigation to assess whether it violated its own market manipulation regulations due to the hack.

SEC's Cybersecurity Risk Management Rules

The hacking incident and its subsequent market impact could potentially infringe upon the SEC's new rules, enforced in July, concerning high levels of cybersecurity risk management, according to securities lawyers.

Uncertainty Surrounding Spot Bitcoin ETFs

Decisions regarding the approval of Spot Bitcoin ETFs are expected to be made soon, potentially as early as this week. However, in light of the recent hacking scandal, the decision date could potentially be postponed. Fox Business' Charles Gasparino has stated that a decision by the SEC to not approve Bitcoin ETFs at this point would be unprecedented.

Edited by Jonathan Stoker