Crypto sell-off after X InfoFi ban: Elon Musk’s social media platform X is tightening its developer API policies, blocking apps like InfoFi that reward users for posting on the platform, X product head Nikita Bier announced on January 15.

X Cracks Down on InfoFi Apps: API Access Revoked to Reduce Spam and AI Slop

Bier said that X has revoked API access for these applications and expects user experience to improve once bots realize they will no longer be paid. He explained that projects like InfoFi (information finance) have led to a "tremendous amount of AI slop & reply spam on the platform," adding, "If your developer account was terminated, please reach out and we will assist in transitioning your business to Threads and Bluesky," as quoted by The Street.

Mixed Reactions From Crypto and Web3 Community

The move has drawn mixed reactions from the crypto and Web3 community. Dogecoin (DOGE) founder Billy Markus agreed that incentivizing spam is not a sustainable model. Popular onchain sleuth ZachXBT described the policy as “based,” while Web3 Collective founder David Choukroun urged X to reconsider, emphasizing that creators seeking revenue alternatives like InfoFi are not bots, as per The Street report.

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What Is InfoFi and How It Works on X

InfoFi, which is a crypto concept, turns financial information and user engagement into monetary rewards. One prominent example is Kaito, an AI-powered crypto search engine that indexes social media to separate quality insights from chatter, rewarding users with its native token, KAITO, as per The Street report.

KAITO Token Drops Nearly 20% After Announcement

Following Bier’s announcement, the KAITO token fell sharply from $0.7011 to $0.5671, a nearly 20% decline. Kaito founder Yu Hu said, "After discussions with X, it’s agreed that a fully permissionless distribution system is no longer viable, nor aligned with the needs of high-quality brands, serious content creators, or X as a platform," as quoted by The Street.

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Kaito Studio Introduced as Tier-Based Platform

Hu confirmed that the platform would sunset features like Yaps and incentivized leaderboards, replacing them with Kaito Studio, a tier-based marketing platform he said would better serve brands, creators, and X itself.

Other InfoFi Tokens Decline

The sell-off extended to Kaito Genesis NFTs, known as Yapybaras, with floor prices collapsing over 50% to 0.21 ETH. Other InfoFi tokens also saw steep declines: COOKIE fell 15%, LOUD dropped 16%, and ARBUS slid about 9%, as per a Crypto Briefing report. Overall, the sector’s total market value fell 11.5% in one day.

FAQs

Why is X blocking InfoFi apps?

X is stopping apps that reward users for posting because they led to spam and low-quality AI content.

What happened to the KAITO token after the announcement?

KAITO dropped nearly 20%, from $0.7011 to $0.5671.