FTX and Alameda Research May Have Used Social Media Bots To Manipulate Crypto Market, Says New Study
New analysis finds that Twitter bot accounts might have lifted the costs of digital belongings listed on embattled crypto alternate FTX and traded by its hedge fund arm, Alameda Analysis.
The examine, performed by the Community Contagion Analysis Institute (NCRI), examined greater than three million tweets between January 1, 2019, to January 27, 2023, that point out 18 cryptocurrencies as soon as publicly listed on the now-defunct FTX alternate.
The examine highlights how FTX’s former head Sam Bankman-Fried was effectively conscious of Twitter’s giant affect on crypto costs.
“Bankman-Fried, on the top of FTX, as soon as illuminated a disturbing development throughout the crypto business, the place perceived worth, typically fueled by social media hype, would eclipse any intrinsic value, resulting in inflated market capitalizations.
He said, ‘On this planet that we’re in, should you do that, everybody’s gonna be like, Ooh, a field token. Possibly it’s cool. Should you purchase a field token,’ you understand, that’s gonna seem on Twitter and it’ll have a $20 million market cap.’ Bankman-Fried’s specific point out of Twitter suggests an acute consciousness of its affect on the cryptocurrency market.”
The examine questions whether or not FTX, which went bankrupt final November, engaged in a Twitter scheme to control crypto markets, as NCRI researchers say they discovered that the bot-like tweets had an impact on token costs.
“It begs the query, did FTX or Alameda have interaction in coordinated inauthentic exercise on social media to artificially inflate market values?
NCRI’s examine means that the intensification of social media exercise was not merely an natural consequence of the cash’ recognition, however probably a strategic ploy to affect market sentiment. Opposite to traditional knowledge, NCRI’s findings present that it was not simply worth variations that considerably influenced tweet volumes, however that the reverse was true as effectively.”
NCRI researchers say that “inauthentic, bot-like feedback” concerning the 18 tokens elevated over time after FTX promoted the digital belongings. The 18 cryptocurrencies embody Render (RNDR), The Sandbox (SAND), Immutable (IMX) and Gala (GALA).
Says the examine,
“It’s notable that bot exercise seems to rise starting with official promotion by FTX. This implies that FTX promotion might have confirmed catalytic for attracting inauthentic amplification. Whereas itemizing on FTX attracted substantial will increase in general chatter for every coin, it’s notable that the proportion of inauthenticity on this chatter considerably elevated over time.”
Bankman-Fried faces a slew of prices associated to the November collapse of FTX, together with allegations that he defrauded prospects and mishandled billions of {dollars} value of their funds.
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