“Fake news” has become a business model, researchers argue

This week Theresa May used a speech to tell Russia: “We know what you’re doing,” at least as far as the country’s efforts to spread discord through disinformation are concerned. In the same week an independent report was published that revealed 30 governments were engaged in using social media to spread discord, among their own electorate and towards others.

Now, a report from online security firm Digital Shadows shows how ‘fake news’ has evolved to become a business model as well as a political tool, with groups running “pump and dump”-style fraud campaigns to manipulate interest and the price of cryptocurrencies.

Subtitled ‘Fake news is more than a political battlecry’, the report seeks to break down the stages of disinformation campaigns – a term it characterises as a subset of the wider ‘fake news’ idea. Disinformation, it argues, doesn’t necessarily need to be geopolitically motivated, but can also be backed by financial goals. Worryingly, it looks as if a sophisticated business model is developing.

A “pump and dump” stock fraud, in the traditional sense, is an attempt to artificially inflate the price of a cheaply bought stock by spreading positive statements, pumping up the price of the stock so that the individual can sell their overvalued shares for a profit. The internet has substantially broadened the way these misinformation campaigns can be rolled out, and Digital Shadows shows how it is affecting cryptocurrencies.

The report names a dark web service called TheInsider, which targets the price of altcoins (non-Bitcoin cryptocurrencies) by spreading posts through social media promoting the currencies.

(Above: TheInsider. Source: Digital Shadows)

“TheInsider then trades these coins between its multiple accounts, driving the price up, before selling these to unsuspecting traders on currency exchanges looking to buy while share prices are still rising,” the report explains, noting that the whole thing could also be a scam targeting those users.

These tactics aren’t limited to cryptocurrencies. The report also mentions the actions of former CEO of Turing Pharmaceuticals, Martin Shkreli, who has been accused of using blogging platforms and social media to manipulate share prices of medicine. “Given the availability and wide range of inexpensive tools, you can see how easy it is to potentially influence perceptions of organisations online for financial gain,” the report states.

While schemes like TheInsider certainly seem unscrupulous, it’s worth noting that artificial inflation of stock prices is by no means a new phenomenon. “Long before cryptocurrencies existed criminals have been using misinformation to boost short-term securities prices, with the explicit goal of swindling naive investors,” Dr Garrick Hileman, Research Fellow at University of Cambridge told Alphr. 

“To combat misinformation the cryptocurrency industry desperately needs more independent research and journalism, along with aggressive law enforcement action against bad actors.”

Digital Shadows’ taxonomy makes an attempt to break down the various tacits of these bad actors, from site impersonation to manipulated ads and social media bots. The report concludes “it’s almost certain that disinformation will continue”, in spite to attempts to remove suspicious content from online platforms, and that this isn’t only a risk for political parties, but individuals and businesses as well.