On the eve of the approval of bitcoin spot ETF, hackers "fake the holy decree"! Bitcoin is about to usher in a "life and death situation"

Another reason for a fake news is that Bitcoin is once again on a "roller coaster" ride.

In the early morning of January 10, the U.S. Securities and Exchange Commission (SEC) issued a document on the social platform X to approve the listing of Bitcoin ETFs. But then the message was confirmed to be a "fake message" from the hackers. Affected by the news, the price of Bitcoin rose instantly, once approaching $47,900, and then suddenly dived, quickly plummeting by more than $2,000, once falling to $45,100, a decline of more than 5%, and the amount of crypto liquidation on the entire network exceeded $40 million within an hour.

As of press time, the latest price of Bitcoin is $46,025.37, down 1.7% on the day.

"The market's expectations for Bitcoin spot ETFs have reached a fever pitch, and any movement will be reflected in the price. A senior crypto asset investor told the China Times.

Hackers "Fake Decrees"

Looking back on the incident, on the morning of January 10, the SEC announced on the official account of social platform X that it had approved all applications for listing of Bitcoin spot ETFs on national exchanges in the United States, and also claimed that the approved ETFs would continue to be monitored to ensure that their compliance measures have always protected investors. At the same time, the news was accompanied by a quote from SEC Chairman Gary Gensler: "Today's approval strengthens market transparency and provides investors with an effective path to digital asset investment opportunities within a regulatory framework." ”

However, soon, SEC Chairman Gary Gensler clarified on his personal account that the SEC's social account had been compromised, that the news was "unauthorized", and that the SEC had not approved the listing and trading of spot bitcoin ETFs.

Subsequently, an SEC spokesperson also said that SEC accounts had been compromised, that social media announcements about Bitcoin exchange-traded funds were incorrect, and that unauthorized messages about Bitcoin ETFs were not made by the SEC or its staff.

Although the message was deleted about 20 minutes after it was posted, the impact is still not to be underestimated. After the news, the price of bitcoin briefly surged above $47,800, updating a new recent high. After the official refutation of the rumors, the price of bitcoin quickly fell below $46,000.

According to Coinglass data, in the past 24 hours, the cumulative amount of cryptocurrency liquidation exceeded $220 million, and more than 70,000 investors were liquidated. At the same time, U.S. blockchain stocks fell into a slump, with Coinbase down 2%, Microstrategy down 2.5%, Riot Platforms down 2%, and Marathon Digital Holdings down 3% in the after-hours session of the day.

In this regard, Lin Xianping, deputy secretary-general of the Civil and Commercial Committee of the China Legal Consultation Center, told the China Times that in response to this incident, it can be seen that the market's expectations for Bitcoin ETFs are very high. Hackers use fake news to intervene in the market, reflecting the vulnerability of the crypto market to manipulation and influence. At the same time, it also exposes the sensitivity and hunger of some investors for investment information.

In the wake of the incident, the SEC announced that it would work with law enforcement agencies and government partners to investigate unauthorized access and any misconduct to determine next steps.

Affected by this incident, the SEC has been criticized by the crypto community. Cameron Winklevoss, co-creator of the cryptocurrency exchange Gemini, commented that the SEC has finally shown the world what it does best: "manipulating the market and hurting American investors".

Timothy Peterson, investment manager at hedge fund Cane Island, pointed out that the SEC's security breach is a potential market manipulation event, and this is exactly the scenario where regulators should protect investors from harm. He asked, "How can the SEC protect hundreds of millions of investors if it can't even protect its own social media accounts?"

Jiang Han, a senior researcher at Pangu Think Tank, told the China Times that the SEC's X account was hacked and false information was published, which is a very serious problem that needs to be paid attention to and investigated. This not only undermines the credibility of the SEC, but also brings unnecessary volatility and chaos to the market. In addition, the large fluctuations in the price of Bitcoin also indicate the market's attention and expectation of Bitcoin ETFs. Although this is false news, it also reflects the market's recognition and demand for Bitcoin ETFs.

Waiting for the final decision

At the moment, there are less than 24 hours left before the final time for the Bitcoin spot ETF review, and although the crypto market is currently optimistic about the prospect of approval, it is still not 100% confirmed.

On January 9, BlackRock, Ark Capital (ARK) and several other potential issuers filed revised application forms with the SEC. Fidelity, Invesco, Galaxy Digital and WisdomTree, among others, have also filed revised S-1 filings with the SEC. The SEC will make a final decision on at least one of these applications by Jan. 10 local time.

The reporter learned that before the spot-backed Bitcoin ETF can start trading, it must first meet the requirements of the approval process at two regulatory levels. First, the SEC must sign the so-called Instrument 19b-4 filed by the exchange on which the ETF is listed, a proposed change to the rules of the exchange that would allow ETFs to trade on stock exchanges. Second, the regulator must approve the relevant Form S-1, which is the prospectus document of the potential issuer. If the SEC approves both sets of required documents, the Bitcoin Cash ETF can begin trading as soon as the next business day after approval.

Since 2013, a number of asset managers have applied to launch spot bitcoin ETFs, but they have all been rejected by the SEC on the grounds of concerns that these products are vulnerable to market manipulation and difficult to protect investors' interests.

However, since the SEC lost a key legal battle with crypto asset manager Grayscale Investments in August last year, there has been speculation that regulators will have to acquiesce to the launch of such a product. Currently, 14 companies, including BlackRock and Fidelity, submitted applications for spot bitcoin ETFs last year.

It is worth noting that the first-mover advantage has always been a common phenomenon in the ETF industry. Take, for example, the first futures-based Bitcoin ETF, the ProShares Bitcoin Strategy ETF, which went live in October 2021 and surpassed $1 billion in trading volume on its first day, far outpacing subsequent competitors. To this day, it remains the largest Bitcoin futures ETF with $2 billion in assets under management. That's why crypto investors and ETF analysts generally believe that the SEC will approve all applications at the same time to avoid a one-size-fits-all situation.

"If all applications are approved at once, a fee war between agencies will be inevitable, and there are already a number of agencies that have adjusted their management fees. The above-mentioned senior crypto asset investor told this reporter.

Wu Gaobin, vice chairman of the Integration Committee of the China Communications Industry Association, told the China Times that the passage of the ETF means that the cryptocurrency market will be further accepted by the mainstream financial market. The listing of the Bitcoin Cash ETF will provide investors with a new investment channel and will also improve the liquidity and recognition of Bitcoin Cash. Therefore, whenever news comes out about whether an ETF has passed or not, the market reacts quickly to it, triggering price fluctuations.

Wu Gaobin said that if the Bitcoin ETF passes, it will have a profound impact on the crypto market. The listing of the Bitcoin ETF will further boost the development of the cryptocurrency market and attract more investors to enter. The listing of the Bitcoin ETF will also increase the liquidity and recognition of Bitcoin, further cementing its position as a leading cryptocurrency.

"However, if the Bitcoin ETF fails to pass, it will undoubtedly be a major blow to the crypto market. The price of Bitcoin could be negatively impacted, and market confidence could also be hit as a result. Wu Gaobin said.

Editor-in-charge: Xu Yunqian Editor-in-chief: Gong Peijia