In an unregulated market such as cryptocurrency, bad actors and spontaneous events continually prey upon unknowing individuals. While the victims of these acts typically consist of naive and inexperienced individuals, even savvy traders sometimes find themselves duped by these ploys.
Since last Thursday, McAfee Antivirus creator and eccentric cryptocurrency magnate has been tweeting a “coin-of-the-day” to his almost 500,000 followers on Twitter. The results of these daily tweets are exactly what one would expect: the coin spotlighted in each tweet is almost instantly pumped as all of the tech pioneer’s followers rush to buy, guided by a fear of missing out (FOMO). Of course, the pump goes just as quickly as it comes, and while these coins may double or triple in value, the price follows in the opposite direction with a volume just as steep, with the coin soon resetting to its value prior to the tweet.
After the first or second of these tweets, well-versed traders created methods to automatically buy and sell the coins McAfee picks almost instantaneously. Such trading bots scan his tweets for these coins and immediately place market buys, followed by market sells a few minutes later. As all of McAfee’s recommendations have involved coins traded on Bittrex, traders used this exchange as their base of operations.
Today, however, these bots misread McAfee’s TRON (TRX) pick, instead purchasing e-Gulden, which is listed as ElectronicGulden (EFT) on Bittrex. TRON is not listed on Bittrex, so when bots searched for the coin, they instead were directed to EFT. Unlike the previous days’ pumps, the biggest losers here were the same botters previously profiting off the misguidance of McAfee’s followers.
While these traders had been profiting heavily off the naive trading of others, they were simply operating in response to a much larger issue. McAfee has proven how much influence a prominent entity has over less regulated markets, and it’s been speculated that his recent tweets were intended to upset the market and personally profit.
McAfee has previously tweeted that he is paid obscene amounts of money by projects seeking his endorsement and support. Other popular social media personalities have also attested that cryptocurrency projects request endorsements in exchange for pay, as these markets are affected incredibly by social media activity.
Of course, these kinds of malicious dealings are absolutely illegal in stocks and other regulated markets. While many fear a future of heavy government intervention, others suggest that such regulations may prevent these sorts of dealings in the future, making the crypto market more fair for the average participant.