FTX Market Manipulation: Bot Battle on Twitter’s Frontlines
In a recent study by the Network Contagion Research Institute (NCRI), it was found that Twitter bots might have a significant impact on manipulating altcoin prices.
The study, which spanned from Jan. 1, 2019, to Jan. 27, 2023, also highlighted potential benefits for FTX and its sister company Alameda.
During this period, NCRI analyzed over 3 million tweets related to FTX-listed coins. Using Botometer, they discovered that out of 182,105 distinct accounts discussing these coins, around 172,451 accounts were flagged as potential bots, making up approximately 20% of online discussions. Botometer is a tool used to evaluate Twitter accounts and determine the likelihood of them being bots.
The report revealed that inauthentic activities on Twitter had a significant impact on boosting the prices of certain tokens on FTX. Notably, six small-cap tokens on the exchange, including BOBA, GALA, IMX, RNDR, and SPELL, were found to be particularly susceptible to manipulation through deceitful social media engagement.
Before these tokens were listed on FTX, Alameda owned at least five of them, and their visibility was boosted by bot-like activity on Twitter. The report raised concerns about the possibility of coordinated inauthentic activity by FTX or Alameda to artificially inflate market values.
Specifically, the crypto asset RNDR experienced a rise in inauthentic posts and engagement on Twitter, resulting in significant double-digit percentage increases in its price. The study identified four instances between 2022 and 2023, during which spikes in bot activity on Twitter coincided with price surges in RNDR.
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Elon Musk, prior to acquiring Twitter, had expressed concerns about the prevalence of bots on the platform and aimed to reduce their presence. While he claimed that bot activity decreased after his takeover, there is limited concrete data to support this claim.
NCRI’s Lead Intelligence Analyst, Alex Goldenberg, noted that Twitter has been making API changes to discourage bot creation, potentially leading to a decrease in cryptocurrency promotion and scams. However, such changes may also hinder independent audits by third-party researchers. Goldenberg suggested that stricter account verification, machine learning for bot detection, and special permissions for certified researchers could be considered to ensure transparency while combating malicious bot activity and other forms of online harm.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
