Social Media Bots Played Crucial Role in Inflating Value of FTX-Listed Crypto Assets, Report Finds

New analysis from the Network Contagion Research Institute (NCRI) reveals that bots on the social media platform X (formerly Twitter) likely played a major role in amplifying the value of cryptocurrencies tied to the now-defunct FTX exchange and its sister firm Alameda Research.

Social Media Bots Boosted FTX-Listed Coins, Says Report

Analyzing over three million posts from 2019 to 2023 mentioning 18 FTX-listed coins, NCRI’s report found bot-like X accounts made up around 20% of online chatter about these cryptocurrencies. The study suggests this inauthentic social media activity effectively forecasted price changes for half of the FTX-associated coins examined.

NCRI’s analysis shows FTX promotions on X immediately preceded surges in the coins’ values, with the proportion of inauthentic posts steadily growing over time to around 50% of total chatter. The findings indicate manipulative tactics were used to artificially boost market sentiment after the coins’ FTX listings.

The report also analyzed activity around recently launched crypto tokens like the meme coin PEPE, detecting abnormal account creation patterns and predictive links between bot posts and price changes. This points to ongoing potential market manipulation via coordinated inauthentic social media activity. The study found that the FTX-listed coins SPELL, IMX, GALA, RNDR, and BOBA were involved in this type of behavior.

“It is notable that bot activity appears to rise beginning with official promotion by FTX,” NCRI researchers detail. “This suggests that FTX promotion may have proven catalytic for attracting inauthentic amplification. While listing on FTX attracted substantial increases in overall chatter for each coin, it is notable that the proportion of inauthenticity in this chatter significantly increased over time.”

As cryptocurrencies become increasingly mainstream, the prospect of manipulation through bots and fake social media accounts poses major risks to investors and financial stability, the NCRI report concludes. The NCRI researchers further underscore the need for greater transparency and oversight of cryptocurrency markets prone to volatility from orchestrated hype and deception on platforms like X.

NCRI’s study demonstrates social media’s critical role in the meteoric rise and spectacular collapse of FTX amid allegations of fraud. The NCRI findings suggest the FTX empire leaned heavily on inauthentic online engagement to prop up worthless assets — a “bot-driven gold rush” with echoes of pump-and-dump schemes.

What do you think about the report published by NCRI regarding X bots and FTX-listed crypto assets? Share your thoughts and opinions about this subject in the comments section below.

Post a Comment

Previous Post Next Post