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Roaring Kitty and the GME Craze: A Call for Better Trade Surveillance

Solidus Labs
June 5, 2024

What TradFi Can Learn From Crypto-native Trade Surveillance on Balancing Accessibility and Market Integrity

The financial world is once again rattled by headlines surrounding Keith Gill, AKA "Roaring Kitty," and his involvement in the GameStop stock frenzy. According to a recent report by the Wall Street Journal, E*Trade is considering removing Gill from its platform due to his significant role in orchestrating a surge in GameStop's stock price. This surge was driven by collective excitement among retail investors, and coordination through social media platforms. 

This chain of events, following a similar spike in 2021, is a prime example of market mania around meme stocks, fueled by viral online trends and influential figures, leading to seemingly irrational trading behavior. It is a stark reminder of the foibles of legacy approaches to market surveillance, and the need for modern trade surveillance tools aimed at more surgically detecting and understanding similar behaviors, in order to separate genuine retail excitement from potential market manipulation.

Crypto markets, having dealt with similar issues from Day 1, are ahead of the curve in addressing this challenge. In this blog, we outline what traditional finance can learn from crypto-native trade surveillance.

Why Crypto Markets Are Ahead of the Curve

While traditional finance has long battled market manipulation, the crypto industry, known for its highly accessible and composable nature, have pioneered innovative techniques for detecting and mitigating such activities, without barring retail investors. 

In the early days, crypto was known as a retail-first ecosystem accessible to all, which in part contributed to its bad reputation as a “Wild West” rife with illicit activities. The industry has made a massive effort to change that - with robust, crypto-native compliance programs becoming central to major crypto exchanges, thus enabling mainstream and institutional adoption of digital assets as a legitimate asset class, as we’re increasingly seeing today.  

While recognizing crypto’s incredible progress on market integrity, the fact is that crypto markets remain prone to extremely high volatility, mainly due to low barriers of entry, fundamentally different structures, and decentralized nature. This can sometimes be conducive to market manipulation schemes like pump & dump, touting, and bashing.

The key to solving this isn’t simply blocking people from markets - access to capital markets is key to more equitable economies. Instead, crypto-native trade surveillance helps exchanges become much better at analyzing trading behavior, identifying malicious actors—whether institutional or retail—and rooting them out while keeping crypto markets running 24/7. So the short answer is: deep market expertise, technological know-how, and a genuine desire to help advance the ecosystem in a safe and regulated way are what have driven the crypto market's evolution over the past few years.

Bridging the Gap: What Traditional Finance Can Learn

Here are key takeaways for traditional finance from our experience in the crypto industry:

  1. Real-Time Monitoring: Continuous, real-time trade surveillance is essential. Modern markets move quickly, and timely detection of manipulative vs. non-manipulative trading can prevent significant financial losses and unnecessary user suspensions.
  2. Integrated Data Analysis: Combining various data sources—trading patterns and traditional news media - with nontraditional data sources, including social media sentiment, DEX swaps, and transaction data—provides a comprehensive view of market activities, enhancing the accuracy of detection algorithms.
  3. Proactive Compliance: Implementing robust compliance measures before manipulation occurs is more effective than reactive approaches. This includes utilizing advanced machine learning and artificial intelligence into your trade surveillance technology, which can significantly improve the detection of subtle and complex manipulation schemes that elude traditional methods.


As the lines between traditional finance and crypto continue to blur, it is imperative that financial institutions adopt advanced technologies to safeguard market integrity. Solidus Labs is committed to leading this charge by providing cutting-edge solutions that detect and deter similar market manipulation. By leveraging our expertise in crypto markets, we offer proactive tools and valuable insights that can help institutions protect their investors, while not compromising on accessibility, fairness, and transparency for all classes of investors.

Together, we can build a more secure and trustworthy financial ecosystem. Game On!

Touting and Bashing Spotlight

Touting and Bashing

What is Touting and Bashing?

As crypto retail traders dominate social media, Solidus Labs' groundbreaking 24/7 NLP (Natural Language Processing) technology transforms unstructured social media data into actionable sentiment-based insights, enhancing our comprehensive trade surveillance safeguards against Touting and Bashing manipulative practices. Touting and bashing involve the strategic use of social media and other communication platforms to artificially inflate (tout) or deflate (bash) the value of an asset. These tactics exploit the herd mentality prevalent in online communities, leading to rapid and often unwarranted price movements. Retail investors, influenced by viral trends and influential figures, may make investment decisions based on false or misleading information, resulting in significant market distortions, ultimately benefiting the manipulative trader or group of traders.

Solidus Labs' NLP Sentiment Analysis

To combat touting and bashing, Solidus Labs has developed groundbreaking Natural Language Processing (NLP) technology that transforms unstructured social media data into actionable insights. Our 24/7 NLP technology continuously scans social media platforms, chat rooms, and other communication channels for sentiment trends related to specific assets. By integrating these sentiment-based insights with on-chain and off-chain trading data, our system enhances the overall effectiveness of trade surveillance.

Interested to learn more about crypto-native trade surveillance? Get in touch or request a demo today.

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