Fraud Blocker

How Artificial intelligence and NLP detected false information from SECgov account hack.

January 10th, 2024 by Damian Szewczyk
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In the volatile and often unpredictable realm of cryptocurrency trading, the recent SEC account compromise that led to the dissemination of fraudulent signals about Bitcoin ETFs is a stark reminder of the risks investors face. In this high-stakes environment, Artificial Intelligence (AI) emerges as a crucial ally for traders, offering a robust shield against scams and deceptive practices. AI's advanced real-time analytics can decipher market trends and flag inconsistencies, thereby mitigating risks associated with phishing attempts and other fraudulent activities. The application of AI in cryptocurrency trading not only empowers investors with enhanced market insights but also fortifies the overall investor protection mechanisms against sophisticated digital threats.

What happened?

The U.S. Securities and Exchange Commission's (SEC) Twitter account was recently hacked (9 January), resulting in the spread of false information about the approval of Bitcoin ETFs. This incident highlighted the vulnerabilities in digital security, even for high-profile organizations. The misinformation briefly caused confusion and potential risk for cryptocurrency investors and traders, underscoring the importance of robust cybersecurity measures in the increasingly digital financial landscape.

Following an initial inquiry on Tuesday, it was confirmed that the SEC's account compromise occurred due to an unauthorized person gaining access to a phone number linked to the account via a third party. The social media platform involved also noted that, at the time of the incident, the SEC's account did not have two-factor authentication activated. Although the platform stated that this compromise did not stem from a breach in their systems, security experts have expressed concern over the unsettling nature of this incident.

Do I need to trust everything that I read on the internet?

The incident involving the SEC's Twitter account hack had a notable impact on the price of Bitcoin. Following the false news about the approval of Bitcoin ETFs posted through the compromised account, Bitcoin's price experienced a significant fluctuation:

Reuters again mentioned that the price of Bitcoin shot up to around $48,000 following the fake post but fell to below $45,000 minutes later, last down by 3.15% at $45,513 after the SEC disputed the information​.

This series of events indicates how sensitive the cryptocurrency market is to regulatory news, especially from authoritative sources like the SEC, and how quickly it can react to such information, whether accurate or not.

Let's try to clarify it

From 02-07-2023 to 10-01-2024 - There was 335 Sec gov tweets (+1 for deleted entry).

Let's use the simplest and the most accessible AI these days - Open AI - Chat Gpt 4

First of all, AI was able to detect a few anomalies:

But how GPT can detect it?

Well, the crucial part of this research is taking Natural Language Processing (NLP). It could play a pivotal role in preventing such events by enabling real-time monitoring and analysis of social media and other digital platforms for anomalous or suspicious communications. NLP systems can detect inconsistencies in language patterns, identify unauthorized or unusual messages, and alert security teams for prompt action.

Yes, you can have a custom system that would give you notification about the entire case, and even validate the source of truth. Companies like Devopsbay can build custom systems, that could detect anomalies, or make something more impressive like automatic requests for additional action. We specialize in machine learning, DevOps and Artificial Intelligence, AI adoption and can adapt to your need.

Anyway, let's jump back to the GPT. This is a communication style that SEC is normally adapting:

  1. Formal and Professional: The SEC's language is formal, reflecting its role as a government regulatory agency. This formality is evident in its clear and precise use of language, often employing technical financial and legal terminology.

  2. Informative and Factual: Communications from the SEC are primarily focused on providing information. They tend to be fact-based, often including data, statistics, and references to specific regulations or legal provisions.

  3. Regulatory and Enforcement Focus: Much of the SEC's communication revolves around regulatory actions, enforcement proceedings, rulemaking, and investor education. This includes announcements of new rules, amendments to existing regulations, enforcement actions against entities or individuals, and guidelines or warnings for investors.

  4. Objective and Neutral: The SEC maintains an objective and neutral tone. Communications avoid promotional language or subjective opinions, focusing instead on stating facts and information relevant to their regulatory responsibilities.

  5. Educational and Advisory: The SEC also has a role in educating and advising investors. Communications often include guidelines, warnings about investment scams or frauds, and advice on safe investment practices.

  6. Legal and Compliance Oriented: As a regulatory body, the SEC's communications frequently address legal and compliance issues, highlighting important aspects of compliance for businesses and individuals in the securities market.

  7. Cautious with Emerging Technologies and Products: When addressing emerging financial products or technologies, like cryptocurrencies, the SEC is generally cautious. Communications in these areas are often accompanied by warnings about potential risks and uncertainties.

  8. Minimal Use of Informal Elements: The SEC's official communications rarely use informal elements like slang, humor, or hashtags. The language is aimed at being accessible yet maintains a high level of professionalism.

Why it wasn't that perfect? HOW NLP was able to detect a different pattern?

Reflecting on the second tweet, which announced the approval of Bitcoin ETFs, several key elements typically found in SEC communications were missing, making it seem potentially inauthentic:

  1. Lack of Formality and Detail: The tweet lacked the level of formality and detail that is characteristic of SEC communications. An announcement of such significance would typically include more specifics, such as references to the relevant regulatory framework or specific conditions attached to the approval.

  2. Use of Hashtags: The SEC's official communications usually avoid the use of hashtags, especially those directly naming specific financial products like "#Bitcoin." This is more indicative of social media marketing or informal communication, which is not typical of the SEC.

  3. Promotional Tone: The tweet had a somewhat promotional tone, indicating an endorsement of Bitcoin ETFs. The SEC, as a regulatory body, maintains a neutral and objective tone, especially when dealing with emerging and highly scrutinized financial products like cryptocurrencies. They typically would not appear to promote or endorse specific investment products.

  4. Absence of Risk Disclosure: In communications about investment products, especially those involving cryptocurrencies, the SEC often includes cautionary language about risks. This tweet lacked any mention of potential risks, which would be unusual for an SEC announcement about a new investment product.

  5. Unusual Announcement Style: The announcement of such a major decision in a single tweet is not typical of the SEC, which usually releases detailed press statements or official notices for significant regulatory decisions, often accompanied by comprehensive explanations and background information.

These elements combined make the tweet seem inconsistent with the SEC's typical communication style, suggesting it may not be an authentic SEC communication.

Besides it, some of people lose money, and some earn thanks to the manipulation and playing x20, and x50 futures.

Conclusion? AI can help you be faster and better than your competitors.

At least it wasn't event that caused total mistakes. Thanks to the fast reaction of the SEC it wasn't totally a disaster in the entire crypto market. In the digital age where misinformation can rapidly spread and cause substantial impacts, as seen in the recent SEC Twitter hack incident, the role of Natural Language Processing (NLP) in cybersecurity is more crucial than ever. NLP's ability to perform real-time monitoring and analysis of social media and digital platforms is invaluable. It can swiftly detect language inconsistencies, identify unauthorized or unusual messages, and alert security teams, thus preventing potential cyber threats and misinformation.

This tweet didn’t age well.

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