Latest Tron “scandal” highlights the problem of fake news in the crypto markets

Latest Tron “scandal” highlights the problem of fake news in the crypto markets

Recently, Tron appears to have been at the center of the latest fake news scandal to hit the crypto world. It started on July 8, after Twitter user Hayden Otto posted a tweet stating that Chinese police were raiding the Tron offices in Beijing. The accompanying video initially seemed credible, showing uniformed police in an office that also displayed the Tron logo. The implication was that police were raiding Tron for participating in a scam.

However, this was far from truth, as Tron founder Justin Sun quickly jumped in to clarify. Protesters had stormed the offices, after finding out that a project called Wave Field Super Community was actually a Ponzi scheme (the project had associated itself with Tron, despite the company' attempts to dissociate itself). The police presence was, in fact, there to monitor the situation and protect Tron's employees.

Despite fast action on behalf of the company, Tron's price immediately plummeted. The incident wiped over $100m from Tron's total market cap in the space of just a few hours which it later recovered.

A recurring problem

Unfortunately, the Tron incident isn't the first case of fake news plaguing the digital currency space. In May, Primitive Ventures founder Dovey Wan outed a fake news scam in China. The report appeared to indicate that Craig Wright had transferred funds out of a BTC wallet known to belong to Satoshi Nakamoto and transferred it to Binance, thereby confirming that Craig Wright is indeed Satoshi.

This relates to an ongoing point of contention between Craig Wright and Binance founder Changpeng Zhao (CZ). The latter had delisted Craig Wright's Bitcoin SV coin from Binance a few months back following Wright's repeated (and unproven) claims that he was Satoshi Nakamoto. Again, the fake news had a market impact, as the value of BSV spiked immediately after the "news" broke.

Neither are these new incidents. Back in 2017, a Steemit writer had warned of the market impact of fake news. They cited a story that had circulated, stating that the IOTA project had partnered with Microsoft and Cisco. In fact, IOTA had only been in talks with those companies. The writer warned:

"This is a PRIME example of how virality with news about popular currencies can create massive, artificial pumps that are destined for a short life once the inaccuracy is revealed for what it is."

While some may dismiss these rumors as frivolous, the truth is they can inflict severe damage on markets. Investors can quickly lose trust and dump their holdings, causing markets to nosedive in response. The Tron and Bitcoin SV incidents are illustrative of just how easily this can happen.

Navigating the sea of fake news

It's not just necessarily a crypto problem, although crypto-Twitter seems to be an unhealthy source of truth for many in the industry. One problem with Twitter is that it becomes a breeding ground for fake news because projects are competing with one another. However, one project losing value doesn't equate to others gaining. This isn't how markets operate.

Nevertheless, traditional markets are also often subject to ups and downs depending on rumors and misinformation. Elon Musk caused shockwaves in the financial markets last year when he suddenly tweeted that he was taking Tesla private at $4.20 per share. He wasn't - resulting in the SEC taking swift action against him.

Because of incidents like these, 40% of Americans report fake news as one of their serious concerns in making investment decisions. Even seemingly reputable brands like Walgreens have faced SEC action for misleading investors.

However, crypto is far more volatile in general than the traditional markets, meaning fake news disproportionately affects market swings. With the influx of institutional money into crypto, we need more reliable sources of news and information than just Twitter. If markets continue to fluctuate so violently, it may ultimately cause institutions to pull their money out. This would be catastrophic for the digital asset space, which is only just starting to gain a veneer of credibility with big investors.

Is there an answer?

Some sources, Mark Zuckerberg included, point to artificial intelligence algorithms as the solution to the fake news problem. In the future, it may be possible that crowdsourced intelligence will help to reduce the instances of fake news. But currently, AI algorithms aren't advanced enough to differentiate all the levels of human nuance contained in even the shortest texts.

The cryptocurrency media operates at breakneck speed, resulting in reporters often picking up stories and reporting them as rumors, asking questions later. The mainstream media only tends to report on significant events in crypto and doesn't track every story. Therefore, crypto media needs to take responsibility for putting facts before clickbait headlines.

However, individuals can also take steps to ensure that they are applying reasonable doubt to tweets and clickbait headlines they see online. If you read an outrageous claim online, check multiple sources, and verify the author before sharing it. Check to make sure the website or Twitter account isn't a spoof or a fake. If something seems inauthentic, don't give it the oxygen of publicity.

In the end, there is no easy solution to the fake news problem. It's down to each individual and entity to take responsibility for what they post, what they share, and what they choose to believe and the markets will do what the markets will do. But let's try and make sure that as much as possible is based on facts, rather than fake news.

‘Designer baby’ book trilogy explores the moral dilemmas humans may soon create

How would the ability to genetically customize children change society? Sci-fi author Eugene Clark explores the future on our horizon in Volume I of the "Genetic Pressure" series.

Surprising Science
  • A new sci-fi book series called "Genetic Pressure" explores the scientific and moral implications of a world with a burgeoning designer baby industry.
  • It's currently illegal to implant genetically edited human embryos in most nations, but designer babies may someday become widespread.
  • While gene-editing technology could help humans eliminate genetic diseases, some in the scientific community fear it may also usher in a new era of eugenics.
Keep reading Show less

There are 5 eras in the universe's lifecycle. Right now, we're in the second era.

Astronomers find these five chapters to be a handy way of conceiving the universe's incredibly long lifespan.

Image based on logarithmic maps of the Universe put together by Princeton University researchers, and images produced by NASA based on observations made by their telescopes and roving spacecraft

Image source: Pablo Carlos Budassi
Surprising Science
  • We're in the middle, or thereabouts, of the universe's Stelliferous era.
  • If you think there's a lot going on out there now, the first era's drama makes things these days look pretty calm.
  • Scientists attempt to understand the past and present by bringing together the last couple of centuries' major schools of thought.
Keep reading Show less

Astrophysicists find unique "hot Jupiter" planet without clouds

A unique exoplanet without clouds or haze was found by astrophysicists from Harvard and Smithsonian.

Illustration of WASP-62b, the Jupiter-like planet without clouds or haze in its atmosphere.

Credit: M. Weiss/Center for Astrophysics | Harvard & Smithsonian
Surprising Science
  • Astronomers from Harvard and Smithsonian find a very rare "hot Jupiter" exoplanet without clouds or haze.
  • Such planets were formed differently from others and offer unique research opportunities.
  • Only one other such exoplanet was found previously.
Keep reading Show less

Lair of giant predator worms from 20 million years ago found

Scientists discover burrows of giant predator worms that lived on the seafloor 20 million years ago.

Bobbit worm (Eunice aphroditois)

Credit: Rickard Zerpe / Flickr
Surprising Science
  • Scientists in Taiwan find the lair of giant predator worms that inhabited the seafloor 20 million years ago.
  • The worm is possibly related to the modern bobbit worm (Eunice aphroditois).
  • The creatures can reach several meters in length and famously ambush their pray.
Keep reading Show less
Politics & Current Affairs

FOSTA-SESTA: Have controversial sex trafficking acts done more harm than good?

The idea behind the law was simple: make it more difficult for online sex traffickers to find victims.

Scroll down to load more…
Quantcast