A recent investigation carried out by the Network Contagion Research Institute (NCRI) has brought to light the potential impact of Twitter bots in influencing the prices of altcoins. The study, which spanned from January 1, 2019, to January 27, 2023, also highlighted possible benefits for FTX and its sister company Alameda. During this period, NCRI analyzed over 3 million tweets on Twitter. By employing Botometer, a tool that assesses Twitter account behavior and identifies bots, researchers found that out of 182,105 unique accounts discussing FTX-listed coins, a majority of 172,451 accounts raised suspicions as potential bots. This indicates that approximately 20% of the online discussions concerning FTX-listed coins were associated with bot-like accounts.
According to the report, these inauthentic activities on Twitter had a significant impact on boosting the prices of tokens listed on FTX. The study specifically observed six small-cap tokens on the exchange, namely BOBA, GALA, IMX, RNDR, and SPELL, which appeared to be particularly vulnerable to manipulation through deceptive social media engagement. The researchers concluded that deliberate and effective employment of “inauthentic chatter” was utilized to manipulate the prices of these FTX coins.
As depicted in the image, prior to being listed on FTX, at least five of these tokens were under the ownership of Alameda, and their exposure was amplified through bot-like actions on Twitter. The report also raised a crucial question: Did FTX or Alameda participate in organized inauthentic behavior on social media to artificially boost market values?
FTX and RNDR
RNDR, a cryptocurrency asset, witnessed a surge in inauthentic posts and interactions on Twitter, resulting in substantial double-digit percentage increases in its price. The Network Contagion Research Institute (NCRI) analysis identified four specific instances occurring between 2022 and 2023. During these occurrences, spikes in bot activity on Twitter were closely followed by significant price surges in RNDR, ranging from 11% to 30% within a 24-hour timeframe.
Before Elon Musk acquired Twitter, he frequently expressed concerns about the prevalence of bots on the platform. His decision to purchase the social media giant was partly motivated by the desire to address and reduce bot presence. Musk has claimed that bot activity has significantly decreased since he took over, but there is a lack of concrete data to validate this assertion.
Alex Goldenberg, the Lead Intelligence Analyst for NCRI, pointed out that Twitter has been implementing API changes to discourage the creation of bots. These changes could potentially lead to a reduction in cryptocurrency promotion and scams on the platform. However, there is a downside to these changes as well. They may hinder the ability of independent researchers to conduct audits on the platform. In other words, it would be more challenging for independent researchers to examine and review the activities on Twitter.
In light of these considerations, the NCRI analyst suggested that [X Corp. to] adopt stricter account verification measures, employ machine learning for bot detection, and grant special permissions to certified researchers. These measures would ensure transparency while simultaneously combating malicious bot activity and other types of online harm.
