Bitcoin tumbles on unofficial reports of SEC approval

A woman walks by an electronic cryptocurrency trading board at a bithumb customer service center in Seoul, Jan. 9. Yonhap

The price of Bitcoin experienced a tumultuous ride on Wednesday, fueled by misinformation surrounding the approval of the cryptocurrency's spot exchange-traded fund (ETF) by U.S. authorities. This uncertainty had a cascading effect on most of Korea's assets associated with the virtual currency, causing a dip in their values with notable downward intraday movements.

According to CoinMarketCap, a crypto exchange, Bitcoin surged to $47,890 (63.2 million won) at around 6:15 a.m., immediately after the news broke. The figure had since dropped 5 percent to $45,400.

Behind the sharp fall was a post on social media platform X under the U.S. Securities and Exchange Commission's profile announcing the approval of the much-awaited ETF.

“Today, the SEC grants approval for Bitcoin ETFs for listing on all registered national securities exchanges,” the unauthorized post read. “The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection.”

Also strengthening the credibility of the post was a comment by SEC Chairman Gary Gensler. Next to his picture, the post read: “Today's approval enhances market transparency and provides investors with efficient access to digital asset investments within a regulated framework.”

The post was removed. Gensler followed with an explanation, stating, “The SEC account was compromised and an unauthorized post was posted. The SEC has not approved the listing and trading of spot bitcoin exchange-traded products.”

The development came amid heightened expectations of the SEC approval, as reaffirmed by former SEC chair Jay Clayton.

“The SEC approval is inevitable,” he said during an interview with CNBC, a U.S. economic news media outlet, Jan. 8 (local time).

The former chair said the approval was a “big step, not just for Bitcoin, but for finance generally. If you can tokenize underlying assets and trade that way. That’s a potential significant change across finance, not just in the ‘crypto space.'”

Local shares related to the virtual assets took a dive across the board.

Kosdaq-listed Woori Technology Investment fell more than 4 percent from the previous day to trade at 6,170 won as of 9:30 a.m.

The company has a 7.22 percent stake in Dunamu, the operator of Upbit, the largest cryptocurrency exchange in Korea.

Hanwha Investment & Securities, which also owns a 5.95 percent in Dunamu, traded at 3,230 won before noon, a decline of about 3 percent.

Some market watchers say the fake news was a blunder resulting from an SEC employee mistakenly sharing the post before the official date of the announcement.