While the SEC ultimately approved the exchange-traded funds (ETFs) holding bitcoin about 24 hours later, the high-profile blunder for the agency puts Gensler in a tough spot as an already unpopular figure in the cryptocurrency world and among Republican lawmakers.
And some Democrats who have been generally pleased with Gensler are joining calls for investigations.
“Mainly, it was embarrassing for the SEC,” Ian Katz, managing director at research consultancy Capital Alpha Partners, told The Hill.
“It’s given ammunition to Gensler’s enemies and his opponents and people in Congress who don’t like him to begin with,” he added.
The SEC revealed last Tuesday afternoon that its account on X, formerly known as Twitter, had been hacked after it appeared to approve the spot bitcoin ETFs. The agency deleted the post after about 30 minutes and replaced it with a disavowal.
The incident quickly prompted calls from Republican lawmakers for the SEC to provide an explanation for the breach.
“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,” Sen. Bill Hagerty (R-Tenn.), a member of the Senate Banking Committee, said in a post on X. “This is unacceptable.”
The agency drew further scrutiny after X said a “preliminary investigation” found the hack was not due to a breach of the social media company’s systems but rather “an unidentified individual obtaining control over a phone number” associated with the account.
The social media company also said the SEC’s account did not have two-factor authentication enabled at the time of the hack.
Several Republican members of the House Financial Services Committee slammed the agency’s apparent lack of security measures in a letter to Gensler on Wednesday.
“This failure is unacceptable, and it is disturbing that your agency could not even meet the standard you require of private industry,” they wrote.
While Gensler has often faced Republican criticism, concern over the breach of the SEC’s account took on a bipartisan flavor when Sens. Ron Wyden (D-Ore.) and Cynthia Lummis (R-Wyo.) called on the SEC inspector general to probe the incident.
“Given the obvious potential for market manipulation, if X’s statement is correct, the SEC’s social media accounts should have been secured using industry best practices,” Wyden and Lummis wrote.
Read more in a full report at TheHill.com.
