New York Calls for Social Media Oversight After Twitter Hack
(Bloomberg) -- The New York State Department of Financial Services is calling for top social media companies to be regulated similarly to banks with a “systematically important” designation, following an investigation of a high-profile Twitter hack in July.
The agency concluded that Bitcoin companies under state regulation, like Coinbase Inc., acted quickly to address the hack, which involved a Bitcoin scam. By contrast, Twitter Inc., a social media company that is not regulated in the same way, was not adequately prepared for the breach..
Teenage hackers were able to access high-profile Twitter accounts, including those of Democratic presidential candidate Joe Biden, rapper Kanye West and the investor Warren Buffett. They used the accounts to promote a Bitcoin scam that netted them about $118,000, according to the regulator. DFS said that it had been able to stop the flow of money as the scheme progressed, blocking the transfer of $1.5 million, thanks to its tight regulation of Bitcoin companies.
In its report, DFS called for federal social media regulation, modeled after the monitoring of large banks. “A useful starting point is to create a ‘systemically important’ designation for large social media companies, like the designation for critically important bank and non-bank financial institutions,” the report said.
The agency criticized Twitter for not having a chief information security office in place at the time of the hack and for failing to properly train employees. “The risks posed by social media to our consumers, economy, and democracy are no less grave than the risks posed by large financial institutions,” the report said. “The scale and reach of these companies, combined with the ability of adversarial actors who can manipulate these systems, require a similarly bold and assertive regulatory approach.”
In a statement, a spokesperson for Twitter said that it placed a high priority on privacy and security. “We have been continuously investing in improvements to our teams and our technology that enable people to use Twitter securely. This work is constant and always evolving,” she said.
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