This article is part of 7 day challenge.
In the previous post, we discussed how fake news is powered by advancement in technology and AI. Today let us analyze the financial impact due to fake news.
Fake news has proven to be disastrous of many people's life. Some of them had to lose their life due to mob violence, which was fueled by fake news. While some of them had to deal financial losses due to fake news. In this post, we shall see some of the major financial crisis due to fake news. Since I'm from India, i'm quoting some events happened in India.
Real Incidents
Few months back, Piramal Enterprises Ltd found itself engulfed in a different kind of crisis. A message on social media claimed that some real estate developers had defaulted on loans taken from Piramal Enterprises and its subsidiary Piramal Capital & Housing Finance (PCHFL).
Similarly, Nestle was in a spot after a WhatsApp message alleged there were poisonous substances in the products of its pet care entity Purina Petcare India.
In September 2018, the Infibeam Avenues stock lost 71% of its market value on a single day after a WhatsApp message circulated among traders raised concerns over the ecommerce company’s accounting practices. The message was attributed to Equirus Securities, which denied issuing any such information.
These are only few real life incidents which happened in India in past 6 months. 2 years back Starbucks was also victim of fake news when tweets advertising “Dreamer Day”, in which the coffee chain would supposedly give out free frappuccinos to undocumented migrants in the US, spread at lightning speed online. There are many such events where the corporates had faced a major financial loss due to fake news.
Impact on Cryptocurrency
In the unregulated world of cryptocurrencies, many fraudsters have seen their opportunity to deliberately spread false information(fake news) to affect the price of their holdings using social media, fake news sites and private chat apps, such as Slack, Discord and Telegram.
A prime example of this is the pump and dump scheme organized by a chat room called ‘Big Pump Signal’, who conspired to promote GVT through a bogus John McAfee twitter account. After sending out a tweet from the account declaring that GVT was the coin of the day, the value of coin increased by $15 in four minutes, with trading volume doubling. The chat group were able to monitor and communicate when the best times were to buy and sell the coin, before the value returned to it’s original cost 19 minutes later. The ability of these groups to communicate on private chats leave the uneducated and overeager traders at risk of falling into their trap. Many have fallen for this trap by pump and dump groups.
There were many fraud ICOs too with fancy website, ideas which sound brilliant, something too good to be true. I have personally burnt my finger in some ICOs where my money has vanished in thin air! Be cautious.
Call to action | Points to remember
- Don't react impulsively to news.
- Use any fact checking websites like https://www.snopes.com/
- Do not fall for the gimmicks of pump and dump groups or 'free signal' groups.
A glimpse of what is coming up in this 7 day writing challenge:
You can also read my previous posts on the same topic, by clicking on the links below.
Day 0 - Announcement - Plan - Prizes
Day 1 - Social media
Day 2 - Going back in time
Day 3 - AI to build fake stories
Day 4 - Exploiting technology to fuel
Day 5 - The science behind it
Day 6 - Financial impact
Day 7 - The future
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