Short-seller bots sow First Republic Bank doubts

Automated bots and fake social media accounts allegedly operated by capital markets short-sellers were used to spread misinformation and sow doubts about US-based First Republic Bank ahead of its collapse in mid-2023. Using AI to examine online activity during the 2023 US banking crisis, Valent Projects discovered two major peaks of activity as tweets and Reddit posts targeted First Republic Bank, coinciding with a collapse in confidence that led customers to withdraw cash. These peaks did not come with a surge in engagement such as likes, retweets or replies , a pattern 'unlikely to occur naturally,' according to the researchers. The campaign, which t he researchers concluded was likely to have been orchestrated by short sellers betting against the bank's share price , is seen to have helped trigger the withdrawal of USD 100 billion in deposits and the collapse of the bank. First Republic was taken over by the Federal Deposit Insurance Corporation (FDIC) and sold to JP Morgan Chase for US 10.6 billion. System 🤖 Unknown Operator: First Republic Bank customers, investors Developer: Country: USA Sector: Banking/financial services Purpose: Sow misinformation Technology: Bot/intelligent agent Issue: Mis/disinformation; Tr ansparency Investigations, assessments, audits 🧐 Valent Projects (2024). Disinformation destroyed a healthy bank – and nobody noticed

Date it happened

2023-03-01

Organisation involved

First Republic Bank

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