On Tuesday, January 9, the crypto community experienced a rollercoaster of emotions as news of the long-awaited spot Bitcoin exchange-traded fund (ETF) approval circulated.
However, the initial euphoria was short-lived as the tweet announcing the approval was mysteriously deleted. SEC Chairman Gary Gensler attributed the incident to a purported hacking of the SEC’s X profile.
The fake approval triggered chaos in the crypto market, resulting in the liquidation of over $300 million in Bitcoin (BTC).
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In the aftermath, U.S. lawyers and senators have urged Congress to launch a probe into the SEC’s handling of the situation, with the irony being that the securities regulator may have to investigate itself on the matter.
US Congressmen call for answers on the incident
While the SEC claims it is a victim of the latest Bitcoin ETF fiasco, legal experts specializing in securities law argue that the peculiar circumstances surrounding the false announcement and the consequential cryptocurrency fluctuations may result in an internal investigation by the SEC itself.
Bitcoin is technically considered a commodity, putting it under the direct regulatory jurisdiction of the Commodity Futures Trading Commission (CFTC), However, the lawyers said the SEC has increasingly blurred its mandate boundaries, especially evident in its recent stringent actions against the crypto market.
Critics argued that if a hack similar to the recent incident had targeted an account of a Wall Street or crypto firm, SEC officials would likely have been quick to initiate inquiries.
Multiple US Congress members and representatives slammed the SEC and its chairman Gary Gensler, demanding answers about the incident that impacted millions of investors.
Representative Ann Wagner described the event as a “clear market manipulation.”
“I plan to get more answers from Chair Gensler on this incident.”
– Wagner added.
“They have to look into this matter since Bitcoin moved so much, it’s a given. A registered broker deal would have to make a filing with the commission because the price of bitcoin moved materially. Also, the SEC violated its own cybersecurity rules. I’ve never seen something like this.”
– a securities lawyer told Fox Business.
Bitcoin ETF applicants vie for investors with fee slashing efforts
The SEC has not yet issued a statement regarding how and if it plans to investigate the matter internally.
At the moment, there are 10 financial institutions awaiting the approval of their spot Bitcoin ETF applications. In the meantime, these companies are seemingly engaging in a price war of sorts, each striving to lower their fees in an effort to draw investors.
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