A new report by the Network Contagion Research Institute (NCRI) suggests that social media activity, particularly from inauthentic accounts, may have significantly increased the value of certain cryptocurrencies listed on the now-defunct FTX exchange.
According to the report, Twitter activity around FTX-listed tokens such as Gala (GALA) and ImmutableX (IMX) often featured a lot of botish and inauthentic accounts, accounting for about 20% of the total online chatter about these assets.
Further analysis revealed that for half of the FTX-listed tokens studied, this unauthentic Twitter activity appeared to predict subsequent price changes.
The report notes that “inauthentic networks have been used successfully and intentionally to influence changes in FTX [listed] coin prices.”
Bot activity tracked FTX entries.
While the NCRI report does not directly accuse FTX of deploying bots, some findings point to suspicious activity around tokens after they were listed on the exchange.
The researchers found that promotion of a coin by FTX was often followed by an increase in average bot scores for accounts tweeting about that coin over time, with inauthentic activity killing 50% of the coin after 15 months in some cases. total volume reached. The charts below show how bot activity increased after FTX listings, indicated by the vertical line.
Analyzing a sample of FTX-listed tokens, the researchers found a significant increase in bot-like activity after these assets received a promotion from FTX’s Twitter account. For tokens such as GALA, IMX, GODS, LINA, SAND, DODO and others, the share of tweets from inauthentic, bot-like accounts grew steadily over time after the announcement of the FTX listing.
The report states that in the entire FTX coin sample, inauthentic chatter predicted price changes for half of the assets.
While FTX is not conclusively involved in coordinated bot activity, the timing of the increase in inauthentic tweets about the listed tokens may be suspicious. As the report describes, promotion by FTX seemed to act as a catalyst for attracting bone reinforcement around these tokens.
Whether driven by FTX/Alameda itself or not, the researchers claim the data indicates an orchestrated attempt involving bots to manipulate market sentiment after the exchange potentially listed and advertised certain cryptocurrencies.
Ongoing bot activity
However, the report warns that this phenomenon is ongoing, citing an analysis of meme coins such as PEPE and PSYOP, which recently reached multibillion-dollar market caps. NCRI also found significant bot activity around these tokens, with inauthentic chatter appearing to predict PEPE price changes in some tests.
While further research is needed, the report concludes that as cryptocurrencies become more mainstream, the prospect of market manipulation through coordinated social media activity poses significant risks to investors and financial stability.
According to the researchers, more transparency and oversight in the cryptocurrency markets is needed. However, recent restrictions on data access for outside analysts may create barriers to identifying potentially fraudulent social media activity that could affect prices.
“Also worth noting is the alarming trend of social media companies, including Twitter and Meta, restricting researchers’ access to data.
This action may deter outside observers from identifying fraudulent and consequential activity, creating a barrier to transparency in financial markets.”
The report advises that regulators, platforms and the public should be aware of the potential for manipulation and develop methods to counter such tactics.