The Securities and Exchange Commission is ready to invest in a social media monitoring tool that measures market sentiment, and has invited bids. Social media manipulation and fraud are invidious components of the cryptocurrency world, and some observers are concluding that as the SEC moves toward regulation, it needs to be able to root out bad actors more effectively.
It’s no secret that Twitter bots are working round the clock to shill a variety of coins, from the established masters like John McAfee to fly-by-night pump-and-dump schemes. Now the SEC has invited bids for a social media monitoring service and toolkit that it clearly hopes will give it a clear view through the murky social media landscape.
The SEC is determined to get a clear view of Facebook, Twitter, Instagram, YouTube, Google+ and LinkedIn. The governing body also wants to monitor public forums, message boards and public news feeds. The SEC is keen to incorporate sentiment analysis, according to the tender document that lays out the brief.
A quick overview of the SEC’s requirements indicates that they’re looking for something with a bit more firepower than TweetDeck:
“Batch mining of social media data feeds, optimally through an API, possibly with sentiment analysis.”
“Sentiment Analysis” (or Emotion AI) refers to algorithms that can autonomously determine the attitude of a speaker (or Tweeter) towards a subject in question. In other words, the SEC isn’t just trying to keep an eye out—this kind of arsenal would allow regulators to give the NSA treatment to the entire cryptocurrency space. Other conditions might suggest increasing scrutiny on Twitter scams and pump groups:
- identification of probable bot accounts
- identification of fake accounts by individuals
Fake accounts, which have long been a staple of cryptocurrency ‘PR’, are a real problem. The US political landscape is still skewed by accusations of Russian bots on Twitter. It has cast a shadow over an entire presidency. If it can do that to the race for the White House, it can certainly have a catastrophic effect on the world of digital currency.
Sentiment analysis is relatively new technology, which relies on AI to determine whether the prevailing mood, as well as individual posts, are positive or negative. But unless the SEC is careful, a monitoring tool can always be turned to the dark side. For instance, it could open the door to industrial espionage in the crypto space, as rival coins and traders set each other up for a fall.
The monitoring tool is a step in the right direction, though, as social media market manipulation has become part and parcel of the cryptocurrency space.
Transparency is good for everybody, but the only question that remains is: will this tool actually achieve it?
Andrew Ancheta contributed to this article. He holds some digital assets, but Nick Hall does not.