The SEC’s Bitcoin ETF approval was chaos. Now Congress wants answers

A group of lawmakers demand that SEC Chair Gary Gensler explain how the agency’s security was compromised earlier this week.
The X breach saw the SEC’s account posted about spot Bitcoin ETF approvals a day early, causing the cryptocurrency’s price to surge.
Led by Rep. Patrick McHenry, a letter to Gensler said the failure is “unacceptable.”
The House Committee on Financial Services wants a briefing by next week.

A group of Republican lawmakers from the US House Committee on Financial Services demand an explanation from Securities and Exchange Commission Chair Gary Gensler about a fraudulent X post earlier this week.

The post announced that spot Bitcoin exchange-traded funds had been approved, one day ahead of the SEC making the real announcement.

In a joint letter sent on Wednesday, the lawmakers led by Patrick McHenry, the committee chair representing North Carolina, requested a briefing from Gensler by January 17 on how the security breach occurred and how he will prevent a future occurrence.

“This failure is unacceptable, and it is disturbing that your agency could not even meet the standard you require of private industry,” the letter said. “All market participants deserve transparency from you and your agency.”

The letter was also signed by French Hill, the subcommittee on digital assets chair from Michigan, as well as Bill Huizenga, and Ann Wagner, Republican representatives from Michigan and Missouri respectively.

The security failure and the subsequent letter add to a list of headaches for Gensler from the crypto industry, which include the SEC losing a highly publicised courtcase against Grayscale in August.

What was the breach?

On Tuesday, a post from the SEC’s official X account announced that the government agency granted approval of spot Bitcoin exchange traded funds.

Gensler posted about an hour later that the SEC account was “compromised.”

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As a result, Bitcoin’s price rose to about $47,900 after the post on X, then plunged to as low as $45,900. It currently trades at $46,800.

On Wednesday, the SEC granted approval to 11 US asset managers which filed to trade spot Bitcoin ETFs.

In response, McHenry congratulated the SEC on the “historical milestone.”

He added that though new laws for digital assets are needed, “the steps taken today are a significant improvement over the SEC’s track record of regulation by enforcement.”

Inbar Preiss is a Brussels-based regulation correspondent. Contact her at inbar@dlnews.com.