Tuesday afternoon, the SEC's official X account announced that all spot bitcoin ETFs had been approved. After fifteen minutes, SEC Chair Gary Gensler wrote that the notification was phony and that the SEC's X account had been compromised. 

The SEC did not have two-factor authentication enabled, according to X (previously Twitter), and the crypto community happily tweeted Gensler and SEC's account security concerns while the markets whippedsawed. The SEC formally greenlit spot bitcoin ETFs the next day.

The SEC needs to investigate what went wrong while the schadenfreude subsides. Additionally, investigators will look into who hacked the account and why. Legal experts predict that the hacker's legal outcome will depend on whether they profited from the post, which might raise awkward concerns for the SEC.

Federal criminal investigations such as the one against the SEC's X hacker are usually under the purview of the FBI. Lawyers told Blockworks that it will depend on who the offender is and where they are whether or not they be apprehended. 

It might be challenging to extradite and prosecute the hacker in the US if the breach was carried out by a foreign national or a state-sponsored espionage organization. 

According to lawyer Andrew Gordon, who specializes in cryptocurrency, if the hacker made money trading on the post, it could raise the likelihood that they would be apprehended because of increased attention from law enforcement and the paper trail the trades left behind. 

For laughter or to manipulate the market?

The US Department of Justice (DOJ) would probably be engaged in any potential criminal case if the hacker was discovered. According to several attorneys, computer fraud would be the lowest accusation that a possible hacker might possibly face. 

According to University of Kentucky law professor Brian L. Frye, "using someone else's account to do anything or accessing it illegally without their permission is a federal crime." 

That being said, I have no doubt that a resourceful federal prosecutor could devise a plethora of additional accusations to press against the defendant. Perhaps something akin to wire fraud, Frye continued.

The British hacker Joseph James O'Connor, who in 2020 obtained access to numerous famous Twitter accounts and requested that followers transfer him bitcoin, was prosecuted by the DOJ under the wire fraud statute. O'Connor entered a guilty plea to counts of money laundering and computer intrusion. O'Connor is currently incarcerated in the US for five years.

Although important information about the hack is still unknown, attorneys stated that whether or whether the hacker attempted to profit monetarily from the incorrect post will be a determining factor in the resolution of any prospective criminal prosecution. Should they make money, the repercussions would be more severe.

What matters, in my opinion, is what was intended. Was it done to manipulate the market? Was it just for laughs?," Gordon questioned.

Governmental organizations deal with the consequences

The SEC issued a vague statement shortly after the X post incident stating that it would look into the reason for the breach. According to one attorney, the SEC may attempt to pin the blame on the platform where the hack occurred while the inquiry is ongoing.

According to George Campbell, an attorney at web3-focused Antifirm, "I don't think it's outside the realm of reasonable speculation to say that the SEC could try to turn this on X and open an investigation into X for potential market manipulation rather than simply looking in the mirror given the backdrop of... Elon Musk's [past] interactions with the SEC being quite colorful." 

Even while there would not be any charges from such a probe, Campbell continued, it might cost the SEC time and money to thoroughly look into its own guilt.

He also anticipates a legislative inquiry of the breach. Following the incident, the SEC was criticized by a number of Republican lawmakers. Congressmen Patrick McHenry and French Hill promised to "start the process of getting to the bottom of how it happened" by writing a letter to Gensler. 

Additionally, other government agencies might want to improve their image by getting involved in the well-publicized realm of cryptocurrency crimes. 

"I believe that the CFTC is making a serious effort to step up its enforcement efforts, and I believe that a case involving bitcoin manipulation would be

An attorney who wished to remain anonymous stated, "I think a bitcoin manipulation case would be really appealing. I feel like the CFTC is really trying to be much more active on the enforcement front."