US Senators Seek SEC Explanation

Yesterday’s security breach at the United States Securities and Exchange Commission (SEC), which led to the dissemination of false information about the approval of spot Bitcoin ETFs, has prompted a rigorous inquiry by US Senators J.D. Vance and Thom Tillis. In a detailed letter to SEC Chairman Gary Gensler, the senators have outlined specific demands and deadlines for the SEC to provide clarity and explanations regarding this significant incident.

Fake Spot Bitcoin ETF Post: What Happened?

The senators’ letter, dated January 9, 2024, begins with a direct address of concern about the SEC’s communication practices: “We write to express concern and request clarity regarding the Securities and Exchange Commission’s social media communications about its approval of Bitcoin exchange-traded funds.”

They elaborate on the consequences of the false announcement, emphasizing the resultant market volatility and the confusion among investors. The senators underscore the critical nature of the SEC’s role and its responsibilities, stating: “These developments raise serious concerns regarding the Commission’s internal cybersecurity procedures and are antithetical to the Commission’s trip mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”

The letter sets forth specific questions and demands a comprehensive briefing, including a detailed explanation of the nature of the errant announcement, including whether it was made by an SEC employee or an external entity as well as a clarification on whether the SEC has made an official decision regarding the approval of Bitcoin ETFs.

Moreover, the US Senators seek information on how the incident might affect the SEC’s timeline for a final decision on Bitcoin ETFs, an outline of the SEC’s plan to investigate the error and strategies for rectifying any financial losses incurred by investors due to the misleading announcement.

Furthermore, the senators have imposed a stringent deadline for the SEC to respond to these queries, stating: “To better understand the nature of the breach and surrounding details, please provide a briefing to my staff as soon as possible, but no later than January 23, 2024.

More US Senators Will Seek Answers

Ron Hammond, director of government relations at the Blockchain Association, has speculated that more US senators are likely to call for an explanation.

First congressional letter on the SEC hack is out and expect several more tomorrow https://t.co/z96uI8f1lK

— Ron Hammond (@RonwHammond) January 10, 2024

Senators Cynthia Lummis and Bill Hagerty also commented on the situation. Senator Lummis emphasized the severity of the issue on X: “Fraudulent announcements, like the one that was made on the SEC’s social media, can manipulate markets. We need transparency on what happened.”

Echoing this sentiment, Senator Hagerty demanded accountability, stating: “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.”

Security Breach Or SEC Lapse?

X’s internal investigation revealed a critical lapse in the SEC’s cybersecurity measures, stating: “Based on our investigation, 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 SEC account through a third party.”

But not everyone believes this theory. Among others, Bloomberg ETF expert Eric Balchunas speculated: “I think someone prepped a planned tweet and put the wrong date, bc the tweet would have made PERFECT sense tomorrow at this time. The language sounds legit SEC-ish IMO vs a crypto knucklehead pulling a prank but I guess we’ll see.”

He added that while there’s been some bits of evidence that point to a hack, “I’m sticking with my initial theory (for now) that it came from inside the SEC, a scheduled tweet gone bad..”

At press time, Bitcoin traded at $45,744.

Featured image from Shutterstock, chart from TradingView.com