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Twitter hack shows risk to social media obsessed markets

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This time it was just a cryptocurrency scam. But what happens if hackers infiltrate Twitter again and take aim at financial markets?

It's easy to imagine a scenario where, instead of tweeting about Bitcoin, a hacked Elon Musk account plunges Tesla Inc.'s stock into a tailspin. It would only take a few seconds for a rogue @realDonaldTrump to send financial shock waves around the world.

For investors who rely on platforms like Twitter to navigate markets, Wednesday's cyber attack on the accounts of prominent U.S. business and political leaders is a reminder that no source of information is infallible. It also highlights the myriad risks posed by hackers in an era when decisions about trading, and much else, are increasingly made by hyper-fast computers instead of humans.

"It definitely exposes the vulnerability of our own credentials and processes," Deven Choksey, a strategist at KRChoksey Investment Managers Pvt in Mumbai. "A false or mischievous communication can pose a very big and serious threat to the entire financial system."

The hack took place just after 4 p.m. EDT on Wednesday, after U.S. markets closed and before the Asia open. Within a short span of time, the Twitter accounts of high-profile figures such as Bill Gates and Kayne West, along with companies like Uber Technologies Inc. and Apple Inc., were urging followers to send funds via Bitcoin.

Twitter said it had detected "a coordinated social engineering attack by people who successfully targeted some of our employees with access to internal systems and tools" and has started an investigation into the incident. The company's shares fell as much as 4.7% on Thursday.

Many of the details behind the attack and what other information the criminals could have accessed are still unknown. For now, the hack doesn't seem to have affected markets, but the potential for chaos and confusion from similar events remains.

"As a trader of equities, commodities, or fixed income, one would be remiss in not having some automatic Twitter feed," said Tom di Galoma, director of government trading and strategy at Seaport Global Holdings in New York. "However given the recent news, I would have to say traders will have second thoughts on the validity of the news."

In 2013, hackers gained access to the Twitter accounts of the Associated Press and falsely reported that there were explosions at the White House and that President Barack Obama was injured. In about two minutes, about $136 billion was wiped from the S&P 500 Index.

Back then, fewer executives and politicians used Twitter and computerized trading wasn't nearly as sophisticated. It all means that there's the potential for a future attack to have a far greater impact, especially if it's credible-seeming news coming from influential accounts.

No one has swayed financial markets through Twitter as much as U.S. President Donald Trump, who regularly gives updates on everything from Chinese trade to energy policy on the platform. In April, Trump sparked a surge in oil prices of more than 30% by announcing that Saudi Arabia and Russia would make major output cuts.

Musk has also relied on Twitter for market-moving announcements. He shocked investors in 2018 and sparked a brief rally in Tesla shares when he tweeted about taking it private at $420. (Many people assumed his feed was hacked -- it hadn't been.) Three weeks later, he backtracked and said the company would remain public.

Retail investors, who have access to fewer sources of real-time information and often rely on social media for trading tips, are among the investors most at risk for being conned, according to Viraj Patel, a currency and macro strategist at Arkera Inc. in London.

"Retail traders now have a huge influence on stock markets, potentially just reading a headline and acting quite quickly," he said. "That is worrying."


Published : July 17, 2020

By : Syndication Washington Post, Bloomberg · Abhishek Vishnoi, Anchalee Worrachate, Theo Golden · BUSINESS