The Securities and Exchange Commission is turning up the heat on Tesla Inc. (TSLA) after CEO Elon Musk’s controversial tweets from early last week, Fox Business reported Wednesday.

Fox Business reported that the San Francisco office of the SEC has subpoenaed Tesla in regards to its privatization plans, as well as Musk's statement, in order to determine whether or not the CEO intentionally misled investors.

Musk tweeted his intention to take the company private at $420 a share — which would value the company at over $70 billion — and that he had the “funding secured” to do it. At the time, investors and commentators were scrambling to make sense of the tweets, and many raised questions about their legality and truthfulness.

Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.

— Elon Musk (@elonmusk) August 7, 2018

(Read: What If Tesla Goes Private?)

Interesting definition of "secured"

Legally, Musk’s “funding secured” phrase puts him on thin ice. According to the Wall Street Journal, the SEC is asking Tesla about its veracity. If Musk hadn’t actually secured funding before Tuesday afternoon, his tweets would constitute a straightforward violation the SEC’s rule 10b-5, which forbids people in the know, like Musk, from making “any untrue statement of a material fact” that could mislead investors or misrepresent the value of a company. Last week, it was unclear whether or not this would result in a formal investigation. However, Fox Business has now reported that this is the case.

Fox Business' Charlie Gasparino, who broke the story, was quoted as saying, "It looks as if they're between a rock and a hard place on this one. [On the one hand] it looks like what Musk said when he said funding was secured...was not accurate. They don't have the funding actually secured. They're talking to people...about the process of going private." 

In response to the news, CNBC quoted Laura Unger, a former SEC commissioner, as saying that enforcement against Musk from the SEC is "substantially likely." She was also quoted as saying that the commission would be looking "certainly for the misstatements and whether or not Mr. Musk intended to manipulate the market." 

This is far from Tesla’s first brush with the SEC. The electric car company was under investigation by the Commission in 2016-17 for its marketing practices around the Model 3. According to documents acquired by Seeking Alpha, the SEC subpoenaed Tesla in 2016 to produce documents about Model 3 orders, production rates, refunds and more.

(Read: Tesla Board to Musk: Stop Tweeting!

Short sellers still love Tesla

This July, Tesla’s iffy numbers came into even sharper focus when Martin Tripp, a former Tesla technician, filed a formal whistleblower complaint with the SEC. According to CNBC, Tripp claims Tesla used faulty batteries and inflated production numbers by 44%. However, despite the company’s repeated shortcomings, continued entanglement with the SEC, and perennial unprofitability, its stock continues to rise (900% in 5 years). Jim Collins, a contributor at Forbes, writes that Tesla’s stock is “less tethered to fundamentals than any I have ever seen,” and its bull is largely based on hype and stockholders trust in Musk’s genius. Short sellers are sceptical, however, and are convinced Tesla is massively overvalued, making Tesla the most shorted company on the market.

Musk has made his distaste for short sellers known, through Twitter and in person. His move to take the company private would cut them out of the picture. The question is, does Musk really have the cash to back up his tweets? If not, how will he, and Tesla Inc. by extension, pay for a blatant violation of rule 10b-5? If Musk’s tweets turns out to be a misstep, will it be the straw that breaks Tesla shareholders’ trust in their genius CEO?