A recent study by the “Network Contagion Research Institute” (NCRI) showed how Elon Musk’s Twitter activity and the high presence of bots have manipulated the prices of several crypto assets in recent years.
Then there are some concerns related to the fact that FTX and Alameda Research played an active role in spamming fake accounts in an attempt to gain more engagement in the Twitter community and push the price of an altcoin in the desired direction.
Full details in the article.
Twitter: Elon Musk’s participation alters the state of the crypto market.
It is not news that Elon Musk’s discussions on Twitter can cause an impact on crypto market prices. This was clearly seen in 2021 when the Tesla CEO announced the possibility for his customers to buy electric vehicles by paying in Bitcoin, and driving up prices for the cryptocurrency.
There were then several situations in which specific tweets referencing Dogecoin brought overt effects on the token’s price action.
His actions did not go unnoticed by the various agencies charged with overseeing the US markets, so much so that in late May 2023, Elon Musk was charged with insider trading in federal court in Manhattan.
More lawsuits were filed against him in June 2022, when a group of investors filed a $258 billion class action lawsuit for manipulating financial markets.
His tweets, mixed with an incredibly high activity of crypto bots tweeting about these two coins, led to a rapid increase in prices totally unjustified by the classic logic of the markets.
It is worth noting how prior to the launch of the two memecoins in mid-April, Twitter recorded a high number of new accounts that spoke positively about these coins, creating disproportionate hype and incredible engagement.
In addition, PEPE would benefit from a pump with a maximum movement amplitude of 30%, precisely as a result of a tweet by Musk on 13 May. Interesting thing to note: from that day on, shitcoin began to dump, never returning to those price levels.
Besides Elon Musk, Twitter bots run by FTX have also influenced the price of crypto assets
On his own, Elon Musk cannot work miracles: the incredible team of spam bots talking about crypto topics has led to market manipulation in recent years.
It is not yet clear whether these bots belong to Musk or not, however, what has emerged from the NCRI study is that most likely the now-defunct exchange FTX and its affiliate Alameda Research may have played an instrumental role in this.
The independent organization extrapolated data from a sample of various cryptocurrencies listed on FTX after analyzing more than 3 million tweets posted between 1 January 2019 and 27 January 2023.
From the results, it was found that Twitter bot activity helped cryptocurrencies on FTX artificially increase in value, among which we find striking cases in SAND, GALA, GODS and LOOKS.
The Network Contagion Research Institute expressed serious concern about the possibility that FTX itself would coordinate the activity of bots, helping it make profits in the markets.
After the launch of the exchange’s native FTT token, the average number of tweets belonging to spam bots that mentioned cryptocurrencies listed on the exchange platform soared.
Regarding the findings, CNRI stated that:
“Indeed, for half of the FTX-listed coins in the sample, the volume of inauthentic tweets showed signs of subsequent price prediction. This suggests that inauthentic networks were successfully and deliberately implemented to influence changes in FTX coin prices.”
The most puzzling thing in this matter is that Sam Bankman Fried and FTX, despite illegally exploiting speculative opportunities from insider trading and other illicit maneuvers, still managed to create a crazy $8 billion bubble, which later burst in November 2022.
Solutions to the bot problem
The problem of bot spam on Twitter has been addressed several times by Elon Musk himself, who has said how it can be detrimental to the crypto market and beyond.
Over the past few years, several initiatives have been proposed to curb this growing trend.
Recently, the social media company proposed paid verification of the blue tick at €9.76 so as to prevent a single person from creating hundreds of credible accounts at no cost. However, this has not stopped the phenomenon, which is continuing to spread albeit less invasively than in 2021.There would actually be more concrete solutions aimed at eliminating the presence of bots on Twitter once and for all.
The new Worldcoin project, headed by Sam Altaman, who co-founded OpenAI with Elon Musk himself, aims to create a digital identity for every web user through the practice of iris scanning.
By obtaining a digital identikit for all users and integrating it as a requirement for registration to web2 and web3 social platforms, it would be difficult if not impossible for an attacker to create several fake accounts.
The problem with this solution is that Worldcoin is not yet an established project on a global scale: AI devices that verify individuals’ biometric data through iris scanning are currently few and unable to handle the world’s online traffic.
In addition, there are several concerns related to the handling of users’ personal data, with several European federal agencies investigating Worldcoin and may take legal action to block the project across the continent.
There are also fears in Africa about the unintended effects of Worldcoin: the Kenyan government has decided to halt all activities related to the AI project in order to see if the project could have any negative effects on the country and the privacy of its citizens.
In the face of all these issues, we can only resign ourselves to the fact that the spam bot on Twitter will not be stopped anytime soon and that the manipulation of the crypto market will continue to exist, considering also Elon Musk’s track record