U.S. Senators Ron Wyden and Cynthia Lummis have called for an investigation into the U.S. Securities and Exchange Commission (SEC) following a security breach. The lawmakers penned a letter to the SEC’s Inspector General, Deborah Jeffrey, on January 11, requesting an inquiry into the breach that took place two days prior and the agency’s failure to adhere to optimal cybersecurity practices.

The security violation involved an unknown party illicitly accessing the SEC’s X account and posting a fraudulent announcement implying the agency’s approval of a spot Bitcoin ETF. Although the SEC did approve such ETFs a day later, it clarified that the initial message was false and confirmed the breach.

The senators criticized the SEC for not utilizing multi-factor authentication and phishing-resistant hardware tokens, such as security keys. They urged the investigation to concentrate on these issues and identify any other security vulnerabilities. They have requested an update on the investigation by February 12, 2024.

While Wyden and Lummis did not indicate that the SEC broke any specific rules through the oversights leading to the breach, they did point out a memo from the White House’s Office of Management and Budget (OMB) issued in January 2022. This memo required agencies to use multi-factor authentication and security keys. Although this policy does not extend to social media websites, the senators argued that the memo underscores the necessity of such features to guard against attacks.

The senators did not suggest that the SEC violated its own rules requiring companies to disclose securities breaches. However, they did hint at hypocrisy, labeling the SEC’s failures as “inexcusable,” especially considering the agency’s new requirements for cybersecurity disclosure.

The senators also underscored the “obvious potential” for market manipulation in their complaint. This was evident when Bitcoin experienced sudden losses as the SEC revealed the false nature of the announcement. The price of Bitcoin (BTC) dropped from $46,865 to $45,415 within two hours of 9:00 p.m. UTC on January 9, marking a loss of about 3%.

Despite the severity of the SEC’s failures, the absence of any specific violations leaves it uncertain what repercussions the agency might face.

This News Article was automatically generated by Bob the Bot (AI)

Information Details
Geography North America
Countries 🇺🇸
Sentiment negative
Relevance Score 1
People Cynthia Lummis, Deborah Jeffrey, Ron Wyden
Companies Office of Management and Budget, U.S. Securities and Exchange Commission
Currencies Bitcoin
Securities None

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