New research shows that Twitter bot accounts may have driven up the prices of digital assets listed on the embattled crypto exchange FTX and traded by its hedge fund arm, Alameda Research.
The study, conducted by the Network Contagion Research Institute (NCRI), investigated more than three million tweets between January 1, 2019 and January 27, 2023, which mention 18 cryptocurrencies that were once publicly listed on the now-defunct FTX exchange.
The study highlights how the former head of FTX, Sam Bankman-Fried, was well aware of Twitter’s major influence on crypto prices.
“Bankman-Fried, at the height of FTX, once highlighted a disturbing trend within the crypto industry where perceived value, often fueled by social media hype, would eclipse any intrinsic value, leading to inflated market caps.
He said, ‘In the world we’re in, if you do this, everyone will say, Ooh, a box token. Maybe it’s cool. If you buy a box token, “you know, it will show up on Twitter and have a market cap of $20 million.” Bankman-Fried’s explicit mention of Twitter suggests an acute awareness of its influence on the cryptocurrency market.”
The study questions whether FTX, which filed for bankruptcy last November, was involved in a Twitter scheme to manipulate crypto markets, as NCRI researchers say they found the bot-like tweets had an effect on token prices.
“It raises the question of whether FTX or Alameda engaged in coordinated inauthentic social media activity to artificially inflate market values?
NCRI’s study suggests that the intensification of social media activity was not just an organic result of the coin’s popularity, but may have been a strategic ploy to influence market sentiment. Contrary to popular belief, NCRI’s findings show that not only did price variations significantly affect tweet volumes, but the reverse was also true.”
NCRI researchers say “inauthentic, bot-like comments” about the 18 tokens increased over time after FTX promoted the digital asset. The 18 cryptocurrencies include Render (RNDR), The Sandbox (SAND), Immutable (IMX), and Gala (GALA).
says the study,
“It is noteworthy that bot activity seems to be on the rise, starting with the official promotion by FTX. This suggests that FTX promotion may have been shown to be catalytic for attracting inauthentic reinforcement. While listing on FTX caused a significant increase in total chatter for each coin, it is noteworthy that the share of fakes in this chatter increased significantly over time.
Bankman-Fried is facing a slew of charges related to FTX’s collapse in November, including allegations that he defrauded customers and misused billions of dollars in their money.
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