Twitter has suspended sign-ups for its Blue subscription service after the initial rollout was marred by users who received a paid verification badge and then impersonated celebrities, politicians and brands.

Twitter users first began noticing the change late Thursday night when the Blue subscription option was no longer in the sidebar menu of the app. The sign-up page for Twitter Blue appears to still direct to a page with information about the service but without an option to sign up.

It was not immediately clear if or when the service would be restored.

The sudden absence of the service — which CEO Elon Musk has touted as an important step as Twitter looks to increase revenue and decrease the prevalence of bots and trolls — adds to a series of whiplash product moves in the two weeks Musk has controlled the company.

One sales employee at Twitter said the company decided to pull back the Twitter Blue verified service after a number of accounts began impersonating companies using accounts with paid-verification badges, which looked the same as Twitter’s original verification badges for notable public figures and brands. 

Even another Elon Musk venture, electric car maker Tesla, could not be protected by Twitter from an impersonator disparaging the brand.

The employee, who asked to remain unnamed citing fear of retaliation, said an account created in the likeness of the drug company Eli Lilly caused a particularly serious problem on Thursday when it tweeted out, “we are excited to announce insulin is free now.” 

That tweet went viral and remained on the social media platform for at least two hours before it was taken down. The real Eli Lilly account later tweeted: “We apologize to those who have been served a misleading message from a fake Lilly account.”

Eli Lilly’s stock price dropped sharply after the fake tweet was posted, as did those of other pharmaceutical companies, including AbbVie, which was also impersonated. Major stock indices were broadly positive Thursday, with the S&P 500 posting its biggest rally in two years.

Internal communications obtained by CNBC indicate that Twitter support initially determined that the tweet impersonating Eli Lilly did not constitute a violation of the company’s terms of service. A sales employee said they encouraged clients to tweet directly at Elon Musk about their problems.

Twitter also re-introduced a newer “Official” badge to some accounts. The company confirmed that news on one of its Twitter accounts.

The pullback of Twitter Blue verified also comes as the company’s new leadership is considering how to comply with oversight from the Federal Trade Commission, according to company-wide emails sent to employees on Thursday night, obtained by CNBC.

Twitter is currently under a consent decree from the FTC, which forces it to notify the agency about new products with a written plan, among other things.

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Some employees had expressed doubt about Musk’s willingness to comply with FTC oversight. Earlier in the week, internal communications on a company message board, which were viewed by NBC news, showed that employees were concerned about whether Twitter’s new leaders would ask them to do any work that could comprise a violation of the consent decree, or any other laws and regulations.

Three of Twitter’s top executives in the areas of security, safety and privacy resigned Wednesday.

Musk wrote in a company wide email on Thursday night: “I cannot emphasize enough that Twitter will do whatever it takes to adhere to both the letter and spirit of the FTC consent decree. Anything you read to the contrary is absolutely false. The same goes for any other government regulatory matters where Twitter operates.”

Musk did not immediately respond to an email requesting comment. The FTC did not respond to an emailed request for comment.

Attorney Alex Spiro added in a separate e-mail on Thursday, “We spoke to the FTC today about our continuing obligations and have a constructive ongoing dialogue. We will of course remain in compliance with the consent decree and the legal department is handling it and happy to answer any questions.”

In his other businesses, Tesla and SpaceX, Musk often clashes with government regulators. For example, he was charged with civil securities fraud by the Securities and Exchange Commission, has proclaimed that he does not respect the financial regulators and accused them in court of trying to “chill” his free speech rights through their oversight of his Tesla shareholder communications. 

He has also accused the federal vehicle safety regulators, NHTSA, of hiring a safety adviser who was biased against Tesla, and of using “outdated and inaccurate terminology.” And he has accused the Federal Aviation Administration of having a “fundamentally broken regulatory structure,” after it failed to promptly approve a SpaceX test launch. 

Justin Brookman, a former FTC official and now the director of technology policy for the advocacy group Consumer Reports, said Musk would be risking Twitter’s finances if it is found to be violating the terms of the consent decree. And the cost will likely be a lot more than the $150 million fine imposed this past spring on the social media giant by federal regulators over accusations of deceptive practices.

“We’re off the map here, and all eyes are on him,” Brookman said of Musk.

He added that it would be a “serious violation” of the consent decree if Musk is found to have been stripping certain privacy or security practices or launching new products without proper security checks. In addition, the new paid check mark program under the Twitter Blue subscription service is going to raise red flags with the FTC because it has already led to the impersonation of celebrities and brands in a potentially harmful way, Brookman said.

“In assuming someone’s identity, most of it is playful, and a lot of it has been making fun of Elon, but there is a lot of potential for mischief,” Brookman said. “And after a lot of privacy or security executives left or were dismissed, you have to question if Twitter security is still looking constantly for security holes as they should be doing or if there’s a dialing back in security efforts and if that is going to increase some chance of a system failure.”

William Kovacic, an antitrust professor at George Washington University Law School who served as FTC chairman during the George W. Bush administration, said the exodus of multiple C-suite level executives is going to raise alarms with federal regulators, and at the least, they’ll want to know what promises Musk can make to ensure Twitter’s security safeguards haven’t eroded.

Should Twitter be found in violation of the consent decree, Musk would face major fines akin to the $5 billion settlement that Facebook CEO Mark Zuckerberg reached with the FTC in 2019 over alleged violations of user privacy data, Kovacic added.

“Not only will you have to write a big check, but you’ll see the imposition of further controls,” he said.

Twitter’s consent decree does not require its CEO to have to certify compliance, but the FTC could force Musk to personally file reports confirming that every facet of the agreement is being followed, just as Zuckerberg has had to do as part of Facebook’s settlement.