Elon Musk could face SEC probe over Tesla’s $1.5bn Bitcoin bet

Billionaire tech mogul Elon Musk could face the wrath of regulators after ramping up the price of bitcoin just days before Tesla revealed a $1.5bn (£1.1bn) bet on the cryptocurrency.

Mr Musk is likely to be quizzed by the US Securities and Exchange Commission (SEC) over whether Tesla already owned bitcoin when his intervention on social media sent prices surging, experts said.

The world's richest man, who is chief executive of Tesla and owns around a fifth of the electric car company, propelled the online currency as much as 20pc higher on January 29 after he changed his Twitter profile to include '#Bitcoin'.

Tesla then revealed in a filing earlier this week that it had bought $1.5bn of bitcoin at some point this year.

It is not known if this was before or after Mr Musk's Twitter activity. He has previously been reprimanded by the watchdog for tweeting about Tesla itself, sending shares higher.

Doug Davison, a partner at Linklaters and a former branch chief of the SEC's division of enforcement, said: “It would not be surprising - given the focus on the chief executive's tweets, Bitcoin pricing and recent dramatic market moves - for the SEC to ask questions about the facts and circumstances here.”  

Vitor Constâncio, who served as vice president of the European Central Bank until May 2018, wrote on Twitter that the SEC is likely to be looking into what happened. 

He added: "It was not disclosed when Tesla had made this investment. In December, Musk said that Tesla could buy Bitcoin, and this was followed by many statements that he supported Bitcoin. Bitcoin kept going up and the Tesla investment has appreciated."

Mr Musk followed up his market-moving Twitter profile change with the message "In retrospect, it was inevitable" - seen by some as a reference to the spike in the currency's price. He removed the bitcoin reference from his profile several days later.

It came amid a wider rally in the value of Bitcoin, with the cryptocurrency up almost 300pc in the past five months as speculators bet on higher prices.

Experts said  the SEC is likely to focus its attention on exactly when Tesla bought bitcoin. In its filing, the firm said its investment policy changed in January and added: "Thereafter, we invested an aggregate $1.5bn in bitcoin."

Bitcoin jumped again when the investment was announced on Monday, netting a £150m paper profit for Tesla on that day alone.

The firm also said it plans to start accepting bitcoin as payment for its cars, another move likely to spark the ire of watchdogs who fear the hard-to-track currency is used by criminals seeking a home for their ill-gotten gains.

Others said the SEC may not find anything of concern. Thomas Gorman, a partner at the international law firm Dorsey Whitney and a former senior counsel at the SEC, said he expects that staff at the regulator looked Mr Musk's comments but they may simply refeect what the tycoon personally believes.

Mr Musk said he would be "off Twitter for a while" on February 2.

Two days later, he was back posting on the social media site, and championing a joke cryptocurrency known as Dogecoin. "Dogecoin is the people’s crypto," he wrote in one tweet. "No highs, no lows, only Doge," he said in another.

Tesla did not respond to requests for comment.

ECB President Christine Lagarde earlier this month described Bitcoin as a "highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money laundering activity".

The SEC declined to comment.