A growing ecosystem of crypto scams is leveraging offensive, AI-generated content on social media platforms, particularly Instagram, to attract unsuspecting investors. This trend raises concerns as the volume of provocative imagery increases, leading to questions about the effectiveness of content moderation on these platforms, especially as we approach the new year.
Research indicates that anonymous creators are rapidly generating violent or racist parody characters, which are often directly tied to newly launched memecoins. According to an internet culture researcher writing in the Financial Times under the pseudonym Etymology Nerd, these memes are artificially manufactured to manipulate engagement and ultimately extract money from unwitting investors. This manipulation is facilitated by a feedback loop in which shocking content generates high levels of comments, shares, and watch time—all metrics favored by social media algorithms.
The visibility gained from such engagement is then exploited to promote new tokens, frequently registered on low-barrier platforms like Pump.fun. Among the notable AI-generated characters is the “Kirkinator,” a parody of the late U.S. political activist Charlie Kirk, and “George Droyd,” a fictional android version of George Floyd. Both characters have been linked to ephemeral tokens that saw a rapid spike in value before collapsing through rug pulls. As noted in the Financial Times, the more disturbing the content, the more likely it is to spread, with violence and transgressive imagery being effectively utilized to game the algorithm.
Even individuals with no interest in cryptocurrency inadvertently assist scammers through their reactions—whether it be shock or amusement—which drives further engagement and increases the likelihood that the associated token reaches active traders. This troubling trend coincides with a broader discussion around the loosening of restrictions on generative AI models. In October, OpenAI CEO Sam Altman announced plans to release a version of ChatGPT that would allow verified adults to access “erotica.” While Altman emphasized the importance of guardrails and safety, critics are concerned that reduced restrictions could lead to more harmful AI applications in the future.
Social media platforms, particularly Meta, which owns Instagram and Facebook, play a pivotal role in content moderation. Following the presidency of Donald Trump, Meta relaxed some of its moderation policies, promoting greater “free speech” and fewer restrictions on contentious topics. This has allowed for more offensive content to proliferate, raising alarms among digital safety advocates.
Reports indicate that the platform Pump.fun has seen significant activity in creating new tokens, with a study from Solidus Labs revealing that 98.6% of these tokens were launched for rug pulls or pump-and-dump schemes. Since its inception at the beginning of 2024, over seven million tokens have been created on the platform, yet only 97,000 have maintained liquidity above $1,000. A spokesperson for Pump.fun, Troy Gravitt, challenged Solidus Labs’ findings, asserting that a large percentage of memecoins, similar to NFTs and tweets, hold little value in the long term. Gravitt further stated, “What is important is the availability of a functioning marketplace connecting motivated buyers and sellers, and the underlying cultural expression to which the market assigns value over time.”
This situation spotlights a pressing issue in the intersection of technology and finance, as social media platforms continue to grapple with the consequences of their content moderation policies amid a rise in offensive AI-generated content. The ability of scammers to exploit these algorithms poses significant risks for investors, particularly those who may not be fully aware of the underlying tactics at play. As the technology evolves, the industry and regulators may need to rethink strategies for managing this volatile landscape to safeguard users from deceptive practices.
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