West STL News

The Chairman of the House Financial Services Committee, Patrick McHenry, along with other committee members, has sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler, demanding a briefing on the SEC's compromised X account. This incident led to a false tweet announcing the approval of Bitcoin ETFs on January 9.

In their letter, the lawmakers expressed their concerns about the SEC's ability to communicate effectively with market participants. They highlighted the impact of the false tweet, which caused a rapid increase in the value of Bitcoin until the SEC clarified that the account had been compromised. During the 15 minutes between the compromised tweet and the announcement of the hack, Bitcoin's price reached nearly $48,000.

The preliminary investigation conducted by X revealed that the SEC account did not have two-factor authentication enabled, allowing an unidentified individual to gain control of a phone number associated with the account. The lawmakers found this failure unacceptable, especially considering that the SEC had previously adopted a cybersecurity risk management rule requiring companies to disclose any "material" cybersecurity incidents within four business days.

The lawmakers emphasized the need for transparency from the SEC and urged the commission to hold itself to the same requirements imposed on companies across the country. They asserted that all market participants deserve to know how the breach occurred and what measures will be taken to prevent such incidents in the future.

As the Committee with jurisdiction over the SEC's activities, the lawmakers requested a briefing from SEC Chair Gensler to gain a better understanding of the breach and the steps the SEC will take to ensure it does not happen again. They expect the briefing to be provided to Committee staff no later than January 17, 2024.

The letter concludes by thanking SEC Chair Gensler for his attention to this important matter.

This incident highlights the importance of robust cybersecurity measures in the financial sector. Market participants rely on the SEC's ability to maintain fair and efficient markets, and any compromise in communication can have significant consequences. As the investigation into the compromised X account continues, the SEC will be under scrutiny to address the shortcomings in its cybersecurity protocols and provide reassurance to market participants.

Overall, the financial services industry will be closely watching how the SEC responds to this incident and implements measures to prevent future breaches. The demand for transparency and accountability from regulatory bodies like the SEC is crucial in maintaining the trust and confidence of investors and market participants.

Click this link to access more information: https://wagner.house.gov/media-center/press-releases/financial-services-committee-republicans-demand-briefing-sec