Facing the Twitter account hack: SEC Chairman Gensler’s statement

The Chairman of the SEC, Gary Gensler, has recently issued a statement regarding the hack that occurred on the Twitter profile (X). 

The same one that caused the spread of a false announcement regarding the approval of a bitcoin spot ETF by the SEC. 

In the statement, the agency stated that it is currently engaged in evaluating the impacts of this incident on itself, investors, and the market.

Let’s see below all the details.

SEC Chairman Gensler’s response to the Twitter hack

As anticipated, the Securities and Exchange Commission (SEC) has issued a statement in response to the recent compromise of account X, through which an unknown agent spread a false announcement regarding the approval of a bitcoin spot ETF.

The President of the SEC, Gary Gensler, is quoted in the statement, which states the following:

“An unauthorized individual has gained access to the @SECGov X.com account by taking control of the phone number associated with the account.”

This description brings to mind SIM swap attacks. In other words, 

a common form of compromise of the X account that can be mitigated through the implementation of multi-factor authentication, an approach previously recommended by Gensler in his writings on X.

Gensler, in the statement, states: 

“The Commission staff is still assessing the impacts of this incident on the agency, investors, and the market, recognizing that these impacts include concerns about the security of SEC social media accounts.”

It also adds that the agency is collaborating with law enforcement to conduct further investigations into the incident. 

Not only that, Gensler also highlighted that there is no evidence that the unauthorized party gained access to any other systems, data, devices, or social media accounts belonging to the SEC. 

The incident has drawn attention to the security of social media platforms, especially considering the enormous influence they have on public opinion and financial markets. 

In particular, the X platform has had to undergo a thorough scrutiny regarding its security measures since its acquisition by billionaire Elon Musk in 2022.

The platform has experienced frequent bugs and interruptions, partly attributable to staff reductions and changes in content moderation policies under Musk’s guidance.

Prospects for SEC Approval of the Ethereum ETF: TD Cowen’s Analysis

The American investment bank TD Cowen has recently expressed doubts about the rapid approval of an ETF on Ethereum by the United States Securities and Exchange Commission (SEC).

According to TD Cowen Washington Research Group, the SEC would prefer to gain experience with Exchange Traded Products (ETPs) on Bitcoin before granting approval for similar products linked to Ethereum or other cryptocurrencies.

The group, led by Jaret Seiberg, has indicated that it may take up to twenty-six months before the SEC approves an Ethereum-based ETF. 

In addition, he suggested that such approval could only occur after the next elections in the United States.

The TD Cowen emphasizes that the SEC has recently approved the first series of Bitcoin-linked ETFs after years of delays and rejections. 

However, the bank’s analysis reflects a similar caution from other actors in the financial sector, including JP Morgan. 

Nikolaos Panigirtzoglou, CEO of JP Morgan, has indicated that in order to obtain approval for Ethereum ETFs, the SEC should classify Ethereum as a commodity similar to Bitcoin rather than as a security. 

Suggesting therefore that such development may take some time.

What does Grayscale have to do with the SEC’s decisions regarding Bitcoin ETFs?

As we know, the SEC has approved several Bitcoin Exchange-Traded Funds (ETFs), marking a significant change in the regulatory landscape of cryptocurrencies. 

This approval, dating back to January 10, 2024, was strongly influenced by a legal dispute with Grayscale, an asset management company.

 In August 2023, the Washington Court of Appeals issued a ruling in favor of Grayscale. 

Specifically, stating that the SEC’s previous rejection of their request for spot Bitcoin ETFs had been done in an “arbitrary and capricious” manner. 

This legal decision has played a fundamental role in shaping the SEC’s position on spot Bitcoin ETFs.

Gary Gensler, known for his thorough caution regarding cryptocurrencies, has acknowledged the influence of Grayscale’s victory in the SEC decision-making process. 

It has also highlighted the Commission’s assumption of responsibility in respecting the law and taking into account the interpretations of the courts. 

Gensler specified that the favorable ruling for Grayscale was a key factor that prompted the SEC to proceed with the approval of Bitcoin ETFs. 

However, it has emphasized that the approval of the SEC should not be interpreted as an endorsement of Bitcoin or the broader cryptocurrency market.