Elon Musk tweets and Twitter bots drove up price of FTX-listed altcoins, research finds

Rampant bots connected Twitter helped to pump up the terms of cryptocurrency, including coins traded by insiders astatine FTX hedge money Alameda Research earlier its collapse, according to a new study from the Network Contagion Research Institute published Wednesday.

NCRI researchers conducted a scaled investigation connected Twitter (now known arsenic X) examining implicit 3 cardinal tweets from Jan. 1, 2019, to Jan. 27, 2023, pertaining to 18 antithetic cryptocurrencies successful concern with New Jersey GovSTEM Scholars. They besides shared their findings with X Corp. days up of publication.

Mentions of definite altcoins by Tesla and SpaceX CEO Elon Musk, who led an acquisition of Twitter that closed past October, look to person caused prices to spike by arsenic overmuch arsenic 50% wrong 1 day, the researchers found.

The NCRI survey pointed to Musk's June 24, 2023, retweet of a station featuring a kitten and the caption, "I aftermath up determination is different PSYOP," a coin created by a pseudonymous Twitter influencer known as Ben.eth. Trading of this altcoin astir doubled successful measurement implicit the adjacent day, according to CoinMarketCap data.

Separately, a Musk tweet connected May 13, 2023, featuring Pepe the Frog memes led to a much than 50% summation successful the terms of altcoin PEPE wrong 24 hours. Musk's tweet fueled some authentic treatment and bot and promotional tweets astir the altcoin, which is based connected a fashionable far-right meme.

The NCRI findings rise important questions astir societal media driven marketplace manipulation successful the broader crypto markets. The survey besides highlights the sizeable situation Musk faces successful reigning successful bot enactment that was pervasive connected the societal media level for years and inactive persists there.

Musk has claimed, without providing data, that bot enactment has fallen since helium acquired Twitter.

According to Alex Goldenberg, Lead Intelligence Analyst for NCRI, "Since Musk's squad took implicit Twitter past year, API changes were made to deter bot creation, perchance reducing crypto promotion and scams. However, these changes travel with trade-offs arsenic they besides hinder autarkic audits by third-party researchers."

Goldenberg recommends that if bot enactment remains high, X Corp. could "consider stricter relationship verification, instrumentality learning for bot detection, and peculiar permissions for certified researchers to guarantee transparency portion combating malicious bot enactment and different forms of online harm."

X Corp. has been expanding the terms to entree information for researchers, portion besides filing lawsuits and threats against researchers looking into hatred code and different online harms connected its platform. In caller weeks, X Corp. sued Bright Data and the Center for Countering Digital Hate, for example, raising the ire of House Democrats. NCRI partners with Bright Data for pro-bono entree to societal media data, Goldenberg noted.

X Corp. did not instantly respond to a petition for comment.

The NCRI survey besides highlights however inauthentic enactment connected Twitter helped thrust up the terms of tokens listed connected FTX successful the months earlier the crypto speech collapsed. "Bot-like accounts were utilized to manipulate marketplace sentiment and thrust up the terms of FTX-listed tokens," Goldenberg told CNBC successful an interview.

Six small-cap tokens listed by FTX were importantly influenced by inauthentic societal media enactment connected Twitter, NCRI found. The researchers said that "inauthentic chatter" was "successfully and deliberately deployed to power changes successful FTX coin prices," for six tokens: BOBA, GALA, IMX, RNDR, and SPELL.

Alameda held astatine slightest 5 of these tokens earlier they were listed connected FTX, and arsenic bot-like enactment connected Twitter amplified the visibility of the tokens. For 1 crypto asset, RNDR, inauthentic posts and enactment connected Twitter concurred with oregon preceded double-digit percent jumps successful its price.

On 4 abstracted dates from 2022 to 2023, spikes successful bot enactment connected Twitter preceded increases successful RNDR's terms ranging from 11% to 30% wrong a azygous day, the NCRI investigation found.

FTX laminitis Sam Bankman-Fried and his squad were good alert of Twitter's power connected the crypto markets, and however blase investors could extract worth from social-media driven terms action.

"People connected crypto Twitter, oregon different benignant of akin parties, spell and enactment $200 cardinal successful the container collectively," Bankman-Fried said successful an 2022 interview connected Bloomberg's Odd Lots podcast. "In the satellite we're in, if you bash this, everyone's gonna beryllium like, 'Ooh, container token. Maybe it's cool. If you bargain successful container token,' you know, that's gonna look connected Twitter and it'll person a $20 cardinal marketplace cap."

FTX was 1 of the largest crypto exchanges successful the satellite earlier it filed for bankruptcy successful 2022.

Bankman-Fried, 31, present faces a national indictment for allegedly committing securities and ligament fraud. He's besides the taxable of Securities and Exchange Commission charges, which alleges that helium built his empire connected a "foundation of deception."

Representatives for Bankman-Fried declined to comment. The SEC and FTX did not instantly respond to a petition for comment.

Read the afloat NCRI survey here.