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Gary Gensler really knows how to wrench defeat from the jaws of victory.
Here's what market executives and crypto insiders have to say about the strange events that occurred late Tuesday. The SEC approved a “spot” Bitcoin exchange-traded fund a day earlier than planned, sending a shockwave through the $1.7 trillion cryptocurrency market.
SEC Fooled, X Account Hacked, Bitcoin ETF Disapproved
But that wasn't the case.
A top Wall Street cop said he was clearly the victim of a hack. Someone hacked into the committee's official X (formerly Twitter) account and spread false news that it had given the green light to the ETF. Bitcoin soared from about $46,700 to nearly $48,000 in the seconds after it was posted, forcing the SEC and Chairman Gensler to admit it was fake. The account was “compromised” and the digital coin dropped to $45,695, causing a mini-crash.
Wow!
Securities and Exchange Commission (SEC) Chairman Gary Gensler speaks during a Senate Banking, Housing, and Urban Affairs Committee hearing on “Securities and Exchange Commission Oversight'' held in Washington, DC, on September 14, 2021. I will testify. ( ((Photo by Bill Clark/Pool/AFP via Getty Images)/Getty Images)
BlackRock decides to cut staff while waiting for Bitcoin ETF decision
Regulatory implications aside, this incident is one of the commission's most embarrassing in recent years. The SEC was gearing up for a big announcement on Wednesday regarding the approval of Bitcoin “spot” ETFs, a key milestone in the maturation of the $1.7 trillion cryptocurrency market.
This approval will likely make cryptocurrencies available to millions of retail investors. The ETF tracks the daily price of Bitcoin. For the first time in history, small investors can buy and trade ETF shares on major stock exchanges.
While the SEC claims to be the victim of the confusion, securities lawyers say the circumstances surrounding the fake post and the resulting volatility in Bitcoin could prompt an investigation into the SEC. argues that it should be done. Since Bitcoin is technically a commodity, it falls under the direct regulatory jurisdiction of the Commodity Futures Trading Commission. But securities lawyers say the SEC has begun to blur the lines of its mandate in recent years, particularly when it comes to enforcing cryptocurrencies. If this kind of hack occurred on Wall Street or a cryptocurrency company's account, many say SEC officials would already be on the phone demanding answers.
In addition to the potential for market manipulation, the SEC passed new rules in July regarding so-called “cybersecurity risk management” for regulated companies. These rules would “require registrants to disclose material cybersecurity incidents and material information about their cybersecurity risk management strategies and governance.”
In this illustration taken on January 8, 2021, a representation of the virtual currency Bitcoin can be seen in front of a stock price graph.Reuters/Dado Ruvic/File photo (Reuters photo)
Live Cryptocurrency Prices: Here
“Bitcoin's movement has been so large that it makes sense that we need to look into this issue,” one securities lawyer told Fox Business. “Due to the large fluctuations in the price of Bitcoin, transactions with registered brokers must be filed with the Commission. Additionally, the SEC violated its own cybersecurity rules. We have never seen anything like this.”
SEC reporters did not respond to questions about how or whether the agency plans to investigate the infringement or the motives of the perpetrators. In a statement to Fox Business, Fox Business said the X account was “compromised. The fraudulent (posts) regarding Bitcoin ETFs were not made by the SEC or its staff.” An SEC spokesperson further stated, “The SEC has determined that there was unauthorized access and activity on the @SECGov x.com account by an unknown party during a short period of time shortly after 4:00 p.m. ET. The unauthorized access has ceased. ” he added. The SEC will work with law enforcement and partners across the government to investigate the matter and determine appropriate next steps regarding both the unauthorized access and related misconduct. ”
Gensler, on the other hand, is a controversial figure on Wall Street and in the cryptocurrency industry due to his heavy-handed regulatory approach as chairman. Wall Street executives say his priorities are shifting to new and uncharted enforcement areas, such as requiring disclosure on climate change.
Crypto industry executives argue that he exceeded his statutory duties by regulating cryptocurrencies through enforcement actions, even though the SEC lacks clear Congressional authority. They claim he was forced to approve the Spot Bitcoin ETF only after losing several high-profile court cases challenging cryptocurrency regulation.
No wonder he was vilified by cryptocurrency enthusiasts and Wall Street executives as an ignorant bureaucrat after the hack. A number of trolls reposted his October warning, also from his SEC official X account, “Be careful what you read on the Internet. The best source of information about the SEC is the SEC.”
None other than Edward Snowden, the famous national security leaker, said this on his official account. “You had one job to do,” Snowden said in a subsequent post. Snowden is wanted in the United States on suspicion of espionage and currently lives in Russia.
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Wednesday's announcement of possible approval has been well-crafted by SEC staff in recent weeks in conversations with issuers such as BlackRock, Ark Investments and Grayscale.
The crypto industry has been actively lobbying lawmakers and policymakers in Washington over the past year to avoid falling under the SEC's jurisdiction. (Photo illustration: Sheldon Cooper/SOPA Images/LightRocket, Getty Images) (Photo illustration: Sheldon Cooper/SOPA Images/LightRocket, Getty Images / Getty Images)
In recent days, Gensler himself has published posts on X warning about the dangers of the still-opaque crypto business, with the ETF scheduled to start trading on Thursday, preparing the market for a big announcement on Wednesday. It appears that he is doing so.
It's unclear whether the hack will affect the timeline for the approval process. Lawyers involved in the matter said it was unprecedented for the commission to reject the application after recently expediting negotiations with the applicant.
