The executives of the Coinbase exchange have publicly stated their willingness to assist the SEC in resolving security issues related to their social media accounts.
This commitment emerged after the violation of agency account X, through which a pre-approval message regarding the Bitcoin ETF was spread.
Let’s see below all the details.
Coinbase exchange and the SEC work together to ensure greater security after the incident on X
As anticipated, the executives of the cryptocurrency exchange Coinbase are offering to assist the Securities and Exchange Commission (SEC) after its X account was compromised yesterday.
Specifically, the violation consisted in the dissemination of a false message of approval regarding the Bitcoin spot ETF.
Philip Martin, Chief Security Officer of Coinbase, highlighted the offering as a serious commitment, stating the following:
“As a cryptocurrency exchange, we have extensive experience in social media security protocols and, as a veteran and patriot, I am excited to help my country. If there are any necessary suggestions, please do not hesitate to contact us.”
The Chief Legal Officer of Coinbase, Paul Grewal, initially hesitant after the publication of the fake post, further emphasized the commitment of the entire Coinbase team to providing support:
“We are committed to doing our part to ensure fair, orderly, and efficient markets for all Americans.”
The offer of assistance from Coinbase is of considerable importance, considering that the SEC itself has sued the exchange, accusing it of violating securities laws and operating an unregistered exchange.
SEC Security Breach: What Happened
As already mentioned, yesterday, the official SEC account released the announcement that approval to list Bitcoin ETFs on all registered stock exchanges had been granted, accompanied by an image with a quote from President Gary Gensler.
However, this post was quickly removed, followed by subsequent statements denying it, stating that it was unauthorized and that spot Bitcoin ETFs had not received approval at the time of publication.
The SEC has announced its collaboration with law enforcement to investigate the breach and any related misconduct. Furthermore, it explained that the intrusion occurred when someone took control of a phone number associated with the account.
Not only that, the social media platform highlighted that the SEC had not activated two-factor authentication for its account at the time of the compromise.
Following this, US Senators J.D. Vance and Thom Tillis sent a letter to Gensler asking for explanations regarding the security breach, defining it as “unacceptable.”
The letter highlights significant concerns regarding the Commission’s internal cybersecurity procedures, which are deemed incompatible with the mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.
Previously, the SEC had communicated about X that the only source of information about the SEC is the SEC itself, while Gensler had already encouraged the use of multi-factor authentication as part of the cybersecurity awareness month.
The possible approval of Bitcoin ETFs: the impact on Coinbase
As we know, analysts and observers anticipate the approval of the first spot Bitcoin ETF by the United States Securities and Exchange Commission (SEC) by January 10th.
The competition between Grayscale, Fidelity, ARK Invest, Franklin Templeton, and others will be intense, as each aims to become the ETF with the highest liquidity.
Being pioneers in the open market represents a significant step, and different companies can distinguish themselves by attracting customers through the pricing structure or other technical details.
Although BlackRock is often seen as one of the main candidates, other players such as ARK Invest, Bitwise, WisdomTree, and Valkyrie have previous experience with Bitcoin futures and an expert approach to cryptocurrencies.
Coinbase has fully bet on the race for spot Bitcoin ETFs, positioning itself as the trusted custodian.
This strategy could not only increase the exchange’s revenues, but also generate a growing demand from other major players in the traditional investment industry.
In addition, it could consolidate its position as the preferred custodian for Bitcoin held in ETF funds.
With the potential to successfully expand its existing business model, which includes revenue from internal volumes and cash flows through various subscriptions and services, Coinbase emerges as a solid choice for investors.
In 2023, the value of its shares has increased by 370%, according to TradingView data.