DOJ: Elon Musk’s DOGE team stored SSA data on unapproved servers, staff contacted election advocacy group

The U.S. Department of Justice told a federal court that Elon Musk’s DOGE team, operating inside the Social Security Administration (SSA), stored sensitive Social Security data on third‑party servers that SSA had not approved. DOJ corrections to prior sworn testimony say two DOGE staffers secretly communicated with an outside advocacy group tied to efforts to overturn election results; one signed a Voter Data Agreement that may have involved matching SSA records to state voter rolls. DOJ flagged possible Hatch Act violations and said SSA referred the two employees for review. The filing noted a March 3, 2025 email — copied to Steve Davis, a senior adviser to Musk linked to DOGE — contained a password‑protected file with private information on roughly 1,000 people drawn from Social Security systems; it’s unknown whether Davis accessed it or whether the file can be opened by current SSA staff. DOJ also said DOGE staff shared links using Cloudflare, a third‑party service not authorized for SSA data storage. SSA maintains DOGE never accessed official systems of record, though corrections raised questions about how restricted data was handled and whether any records were accessed after court orders blocking access. Key implications: possible misuse of SSA data, Hatch Act concerns, unapproved cloud storage (Cloudflare), involvement of Steve Davis, and potential voter‑data matching via a Voter Data Agreement.
Bearish
This news is bearish for crypto market sentiment for several reasons. It ties a high-profile crypto-related project (DOGE team tied to Elon Musk) to alleged mishandling of sensitive federal data, possible political interference, and unauthorized third‑party cloud use. Regulatory and legal risk tends to increase uncertainty for markets and can draw closer scrutiny from regulators of broader crypto and tech activities tied to prominent figures. Past incidents linking crypto industry actors to legal or data‑security controversies (for example, regulatory crackdowns after major exchange compliance failures or political entanglements) have coincided with short‑term price weakness across risk assets and crypto due to elevated uncertainty and potential for enforcement actions. Short term: expect risk‑off reactions, increased volatility, and downward pressure on sentiment-sensitive assets as traders de‑risk. Long term: if investigations prompt fines, restrictions, or tighter oversight of crypto projects working with public institutions, institutional appetite could be dampened, slowing capital inflows. Neutral outcomes (no access proven, limited sanctions) would mitigate lasting damage, but overall the announcement increases regulatory and reputational risk — a bearish catalyst until resolved.