A targeted cyberattack on Kaito AI’s official X (formerly Twitter) account caused significant turbulence in the KAITO token market, highlighting the risks of social media-driven manipulation. The attack, which spread false claims about compromised Kaito wallets, resulted in a sharp price drop of 9%, with the token swinging nearly 20% before stabilizing. This event raised concerns about the growing trend of using social media breaches for market manipulation.

The Cyberattack and Its Impact

The hackers, who gained control of both Kaito AI’s official X account and the personal account of founder Yu Hu, released misleading statements claiming that Kaito wallets had been compromised. The false message read:

“We have identified irregular activity in multiple wallets linked to Kaito AI. Our team is actively investigating to assess the potential impact. Initial reports suggest that a percentage of the token supply may have been compromised.”

This misinformation led to panic selling, pushing the price of KAITO down to $1.30 before the false posts were removed and corrections were made. Although control was regained swiftly, the price impact was already evident.

Panic Selling and Price Recovery

The misinformation fueled a panic-driven sell-off, causing a sharp 9.07% drop in KAITO’s price. However, once Yu Hu and the Kaito AI team clarified the situation and assured investors that the wallets were safe, KAITO began to recover. The price rebounded to $1.56, marking a 20% increase from its lowest point.

Despite this recovery, KAITO’s price didn’t maintain its peak for long, settling back at $1.44, reflecting a 9.12% net gain from the initial drop. The extreme volatility highlighted how the hackers may have taken advantage of the market’s panic to execute profitable trades.

Market Manipulation and the $1 Million Profit

Yu Hu confirmed that the hackers made an estimated $1 million from their actions, including $300,000 from KAITO-related trades. Upon further investigation, the Kaito AI team and blockchain analysts linked the attack to the same group responsible for a recent hack of DB’s X account. The hackers had opened a large long position on Trump token just before DB’s account was hacked, followed by the dissemination of misleading claims to manipulate prices.

Subsequently, the same group took advantage of the volatility in KAITO’s price. They opened a short position on the token just before the fraudulent tweets were posted. This move allowed them to profit from the panic selling that followed.

Security Concerns and Social Media as a Weapon

The incident raised concerns over the vulnerability of social media platforms in enabling market manipulation. Yu Hu explained that despite having high-level security measures, including two-factor authentication (2FA) through Yubikey hardware, the attackers managed to bypass these protections.

This breach is not an isolated case. Analysts noted that similar attacks targeting other projects, such as Jupiter, have been seen in the past. These incidents demonstrate how social media accounts are increasingly being used as tools to spread misinformation and manipulate crypto prices.

DeFi Warhol, a crypto market analyst, highlighted the sophistication of the attack, stating: “Hackers are getting smarter. Instead of posting blatant scams, they shorted first before spreading a seemingly legit tweet concerning the $KAITO supply.”

The Growing Threat of Social Media Manipulation

The hack underscored the growing role of social media in crypto market manipulation. A single misleading post can trigger panic selling, leading to millions in liquidations and causing extreme price fluctuations. The $1 million profit earned by the hacker reinforces the need for heightened vigilance in the crypto space.

As the industry faces these new threats, calls for better monitoring of suspicious market activity are growing louder. Until stronger safeguards are implemented, traders are urged to verify information across multiple channels before making decisions, particularly when it comes to unverified social media posts.

This incident serves as a stark reminder of the potential risks of relying on social media for financial decisions, especially in the volatile world of cryptocurrency.