Two U.S. senators, J.D. Vance and Thom Tillis, have penned a letter to the Securities and Exchange Commission (SEC) Chairman, Gary Gensler, demanding explanations regarding the recent security breach on the agency’s official X account. The breach sent shockwaves through the Bitcoin market. Senators deemed the incident as “unacceptable” and granted Gensler a deadline until January 23 to respond to their inquiries.
The situation unfolded when, around 4:11 p.m. Eastern Time, the SEC tweeted that it had granted approval to list Bitcoin exchange-traded funds (ETFs) on U.S. registered stock markets. However, approximately 15 minutes later, Gensler issued a clarification stating that he had compromised the SEC account, and the agency had not approved such products
In the letter, Vance and Tillis expressed serious concerns about the SEC’s internal cybersecurity procedures and their misalignment with the agency’s mission to protect investors, maintain fair and efficient markets, and facilitate capital formation. Additionally, they raised six specific questions seeking clarification on the incident.
Compromised Phone Triggered the Disaster. Gensler’s Responsibility Yet to be Determined
Some of the questions include the identity of the person responsible for the X post and whether it could be an SEC insider, how the security breach will impact the SEC’s planned schedule for making decisions on Bitcoin ETFs, and whether the agency intends to compensate for financial losses resulting from the error.
The letter also notes that Bitcoin’s price volatility was evident during the announcement and subsequent clarification, reaching a peak of around $47,950 before descending to $45,285, with the current price at $45,133 at the time of publication.
The SEC announced that it will collaborate with law enforcement to conduct a thorough investigation into the X account hack. According to the X security team, the preliminary investigation indicates that an unidentified person took control of the phone number associated with the agency’s account, which, unfortunately, did not have two-factor authentication implemented.
The senators’ letter reflects the growing importance of cybersecurity in the financial sector and how incidents of this nature can have a significant impact on markets and investor confidence. The SEC’s response to these questions will provide clarity on the measures taken to address the breach and restore the integrity of the regulatory process.