Twitter’s Wild Crypto Ride

Crypto Ride

Is Elon Musk winning? Check your crypto offers

We analyse and track efforts to manipulate information. But not all of those efforts are related to politics. In fact, the most common are financial. This is a huge area that we keep an eye on because the potential to earn money fuels new techniques that we then see elsewhere. In this newsletter, Zouhir explains why Elon Musk’s plans for Twitter are doomed if he can’t address the platform’s crypto scammers

Twitter and cryptocurrencies embody our new world. Both take essential components of human society – information and money – and refashion them for the borderless, peer-to-peer, interconnected digital age. But for all that is new, they haven’t managed yet to address the perennial flaw whenever people trade anything; price manipulation through rumour and lies.
What ‘s going on in the cryptocurrency/NFTs trading conversation online shows how well – or not – Elon Musk is doing in his quest to make Twitter the world’s most trustworthy source of information.
Information and markets have been intimately linked since organised commodities and securities trading first appeared in Europe in the 16th century. Over the centuries, laws were established to facilitate more trade by providing clear rules and legal accountability. It soon became clear that reliability and accessibility of information were just as vital. In 1851, Paul Reuter set up the news agency that carries his name with the aim of feeding the demand of London’s traders, banks and brokerages for reliable information.
Deregulation is a defining feature of cryptocurrencies. But whereas the blockchain provides the transparency that crypto relies upon, there is no similar mechanism for information. Social media deregulated production of and access to information without the transparency of blockchain.
So it’s hardly a surprise that coordinated influence campaigns are a major feature of online discussion about crypto and NFTs. Twitter, Reddit, Telegram and YouTube have been the key platforms where information about the latest hot investment opportunities, meme coins or airdrops is generated and shared. Although Facebook insists users of its platforms divulge their real names, anonymity is easier to maintain on the others.
The information space around crypto resembles the free-for-all rumour mill that existed in the pubs and coffee houses around the Royal Exchange before Reuters set up shop.
With a lack of verifiable information on which to base investment decisions, enterprising (if unethical) individuals have created communities on these platforms to drive up the price of crypto assets in which they often have an undeclared interest.
Although we can show manipulative behaviour promoting certain coins and tokens, it is not possible to know whether those responsible for the crypto assets are responsible for the manipulation taking place. We can see however that classic “pump and dump” techniques are making some people a lot of money while most are losing out.
The screengrab in Fig.1 shows how Twitter is used to push crypto assets. As the post demonstrates, the account promotes different coins and tokens to its followers with expectations of doubling or tripling their initial investment.

Twitter Screen Grab

Fig. 1: Twitter account @pumpmanipulator (since suspended) had 28,000 followers and an accompanying Telegram channel (still operating) with 18,000 subscribers.
Twitter has rules to prevent just this sort of activity. The use of automated accounts is specifically addressed in the company’s policies (link here). The policies outlaw:

  • Artificial amplification of conversations on Twitter, including through creating multiple or overlapping accounts
  • Generating and purchasing fake engagements
  • Engaging in bulk or aggressive tweeting, engaging, or following
  • Using hashtags in a spammy way, including using unrelated hashtags in a tweet (aka “hashtag cramming”)

Crypto scammers routinely violate pretty much all of these rules.
For example, we examined a tweet from @OxFoxNFT (Fig. 2 below left) promoting a giveaway of the Arbitrum token. A quick check via a network visualisation/bot checker such as Hoaxy (Fig. 3 below right) shows most of the accounts powering its online visibility are inauthentic. Giveaways are a common technique used to build interest in a newly minted cryptocurrency. The fake accounts trick Twitter’s algorithms into pushing the tweet onto more people’s timelines.

Twitter Giveaway Scam

Other indications of widespread use of bots and fake accounts include:

  • Unusually high quote tweet and retweet figures for posts advertising crypto offers
  • A large discrepancy in engagement figures between different posts in a crypto promoting account’s timeline
  • Lots of engagement from accounts with profiles that resemble each other in language or visuals (a classic sign of a bot farm for rent)
  • Lots of tweets that copy and paste the same lines, such as “Good project”, “Awesome project”, “Nice and strong project”, “Potential project guys” and “It’s a very good project”

The manipulation around crypto is generally intended to “amplify the conversation”. The ultimate aim being to increase the number of people who see the offer and take it up, and therefore make it rise in price.
Unsurprisingly, the activities that Twitter has banned can be purchased at a price. Cyber security firm Trend Micro in 2017 found that a twitter account with 300,000 followers could be bought for $2,600 (see report here)
According to research (for example, check out this report by Bank of America), young people in particular turn to social media for investment related advice, making them prime targets for such manipulation.
The narratives used by those behind these influence campaigns highlight a cynical approach aimed at a younger demographic. While promising huge returns, the manipulated posts also include references to issues of concern to the audience such as climate change.
Monitoring the comments on such accounts, it is clear once the pump has been dumped, there are always those who have lost out, sometimes losing 98% of their initial investment.
Social media is increasingly the medium of financial manipulation. The Gamestop short squeeze of 2021 showed a relatively small number of people can have a massive impact on stock prices. The decentralised and deregulated nature of cryptocurrencies and NFTs and the potential for quick and easy cash make the whole crypto/NFT trading space a magnet for scammers. But at the same time, the regulatory framework is – theoretically at least – easier to enforce; it’s harder to claim a freedom of expression defence for pumping and dumping financial assets. So, if Musk wants to make good on his aim to make Twitter the modern “town square”, one of the first things he would have to do is clean up the information environment around modern financial instruments. So far, this isn’t going well.
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