US Lawmakers Slam SEC Over Fake Bitcoin ETF Tweet — Say ‘This Failure Is Unacceptable’

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U.S. lawmakers are demanding answers from the U.S. Securities and Exchange Commission (SEC) and Chair Gary Gensler regarding the regulator’s X account breach that led to a fake tweet on the social media platform announcing the approval of spot bitcoin exchange-traded funds (ETFs), a decision the commission hadn’t yet made at the time. The SEC says it’s investigating the incident. According to Elon Musk’s X platform, the SEC’s account did not have two-factor authentication enabled at the time the account was compromised.

SEC Investigates X Account Breach, Lawmakers Want Answers

Four U.S. lawmakers sent a letter to U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler on Wednesday “demanding a briefing on the SEC’s compromised X account, which led to a false tweet announcing the approval of bitcoin ETFs on January 9.” The official X account of the SEC was compromised on Tuesday evening.

The letter was signed by the Chairman of the House Financial Services Committee, Patrick McHenry, the Chairman of the Subcommittee on Oversight and Investigations, Bill Huizenga, the Chairman of the Subcommittee on Digital Assets, Financial Technology and Inclusion, French Hill, and the Chairman of the Subcommittee on Capital Markets, Ann Wagner.

“The U.S. Securities and Exchange Commission’s (SEC) ability to fulfill its mission — to
protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation — is directly tied to the Commission’s ability to communicate with market participants,” the lawmakers wrote. “According to X’s preliminary investigation, the SEC account did not have two-factor authentication enabled and an unidentified individual obtained control of a phone number associated with the SEC’s account,” they added, emphasizing:

This failure is unacceptable, and it is disturbing that your agency could not even meet the standard you require of private industry.

“To better understand how this breach occurred and how the SEC will ensure it cannot happen again, please provide a briefing to Committee staff no later than January 17, 2024,” the letter concludes.

Following the incident, X confirmed that the SEC’s account “was compromised,” noting that a preliminary investigation has revealed that “the compromise was not due to any breach of X’s systems, but rather due to an unidentified individual obtaining control over a phone number associated with the @SECGov account through a third party.” X further noted: “We can also confirm that the account did not have two-factor authentication enabled at the time the account was compromised. We encourage all users to enable this extra layer of security.”

Following the X account breach, the SEC issued a statement explaining:

The SEC will work with law enforcement and our partners across government to investigate the matter and determine appropriate next steps relating to both the unauthorized access and any related misconduct.

Several other lawmakers also criticized the SEC and Chair Gensler after the incident. Senator J. D. Vance demanded an explanation, stating: “It is unacceptable that the agency entrusted with regulating the epicenter of the world’s capital markets would make such a colossal error.” Senator Bill Hagerty wrote: “Just like the SEC would demand accountability from a public company if they made such a colossal market-moving mistake, Congress needs answers on what just happened. This is unacceptable. Senator Cynthia Lummis opined: “Fraudulent announcements, like the one that was made on the SEC’s social media, can manipulate markets. We need transparency on what happened.”

What do you think about the SEC letting its X account be compromised and a fake tweet being sent out about the approval of spot bitcoin ETFs? Let us know in the comments section below.