U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler testifies before a Senate Banking, Housing, and Urban Affairs Committee oversight hearing on the SEC on Capitol Hill in Washington, U.S., September 14, 2021.
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler testifies before a Senate Banking, Housing, and Urban Affairs Committee oversight hearing on the SEC on Capitol Hill in Washington, U.S., September 14, 2021. Reuters / EVELYN HOCKSTEIN

KEY POINTS

  • The SEC's X account was hacked on January 9
  • It posted a tweet that stirred the market and saw around $90 million in liquidations
  • Gensler: " there is currently no evidence that the unauthorized party gained access to SEC systems, data, devices, or other social media accounts"

U.S. Securities and Exchange Commission chairman Gary Gensler broke his silence last Friday, claiming that there is "no evidence" that hackers were behind the controversial tweet on January 9 and they have gained access to the financial regulator's other systems, data, or social media accounts.

The SEC chair's statement comes amid increasing political pressure from lawmakers demanding a thorough explanation for the security lapse associated with the compromised X (formerly Twitter) account.

"While SEC staff is still assessing the scope of the incident, there is currently no evidence that the unauthorized party gained access to SEC systems, data, devices, or other social media accounts," Gensler said in a statement before adding that the "SEC takes its cybersecurity obligations seriously."

It's worth mentioning that that the support team of X revealed that the hack was possible as the account did not activate the two-factor authentication (2FA).

"Staff are coordinating with appropriate law enforcement and federal oversight entities, including the SEC's Office of Inspector General, the Federal Bureau of Investigation, and the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency, amongst others, in their investigations," Gensler added.

The incident was a major blunder since it happened on the eve of the potential approval of the eagerly awaited spot Bitcoin exchange-traded fund (ETF) applications.

The compromised X account made a false tweet on January 9 announcing that the BTC ETFs had already been approved, which resulted in around $90 million in liquidations.

"Today the SEC grants approval for #Bitcoin ETFs for listing on all registered national securities exchanges," the malicious actors behind the hacked account wrote. "The approved Bitcoin ETFs will be subject to ongoing surveillance and compliance measures to ensure continued investor protection."

A parliament of Senators immediately demanded an answer from the SEC following the security incident that led to false yet market-moving information.

Republican senators J. D. Vance and Thom Tillis, in a co-signed letter, demanded that the financial regulator be held liable for the "widespread confusion" and damage the false tweet had caused investors and described the incident as "antiethical to the Commission's tripart mission to protect investors, maintain a fair, orderly and efficient market, and facilitate capital formation."

Other Republicans like Senators Bill Hagerty and Cynthia Lummis, echoed similar sentiments via separate tweets.

"Fraudulent announcements, like the one that was made on the SEC's social media, can manipulate markets. We need transparency on what happened," Senator Lummis said.

While Senator Hagerty noted, "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."

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