X Crackdown On Paid Engagement Apps, AI-Generated Content And Reply Spam Hits Crypto Tokens

Social media platform X revoked API access for applications that reward users for posting on the site, triggering immediate sell-offs across the cryptocurrency sector.

The platform's head of product, Nikita Bier, announced the policy change on Thursday, specifically targeting so-called InfoFi applications that provide financial incentives for user posts and engagement.

The move sent shockwaves through the crypto community, with multiple tokens experiencing double-digit declines within hours of the announcement.

InfoFi projects, which combine information sharing with financial rewards, have been accused of generating substantial amounts of AI-generated slop and reply spam on the platform.

Within some of these projects, which are linked to the crypto community, rewards are offered to encourage users to amplify project messages through tokens and perks.

Bier stated the platform had already revoked API access from affected applications, suggesting user experience would improve once automated accounts realised they were no longer receiving payments for their activity.

The market reaction was swift and severe. Kaito, the most prominent InfoFi project, saw its token plunge 20 per cent immediately following Bier's announcement, whilst Cookie DAO and other InfoFi tokens fell between 11 per cent and 15 per cent.

The broader InfoFi category, valued at approximately £290 million, dropped more than 10 per cent. Kaito founder Yu Hu subsequently announced the platform would sunset its Yaps programme and incentivised leaderboards, pivoting instead to Kaito Studio, a more selective, tier-based marketing platform designed to work across multiple social channels.

The platform offered assistance to affected developers whose accounts were terminated, suggesting they transition their businesses to alternative platforms such as Meta's Threads or Bluesky.

However, when questioned whether InfoFi platforms could continue operations by paying for access, Bier clarified that wasn't an option, noting they were already paying millions for Enterprise API access.

The decision exposes structural weaknesses in crypto projects built around reward-for-post mechanics, many of which relied heavily on X for distribution and verification of engagement.

The ban follows recent tensions between X and the crypto community over algorithm changes and content reach.

Blockchain investigator ZachXBT, who previously accused InfoFi platforms of inflating user metrics, praised the decision, claiming it would rescue the crypto Twitter community from inorganic activity and fake engagement metrics.

Data from one analyst showed automated bots generated 7.75 million crypto posts on 9 January alone, representing a 1,224 per cent spike attributed to InfoFi reward systems driving spam across the platform.

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