Wall Street Bros, Reddit, and Gamestop Oh My!

Published via CS DISCO Blog, Feb, 25, 2021

On January 26, 2021 a one-word tweet reverberated across the Twitterverse and rocketed a small online community from obscurity to infamy. When Elon Musk tweeted “Gamestonk” and linked to the Reddit community r/wallstreetbets, every casual investor and multi-billion dollar hedge fund took notice. The result? Major hedge funds lost $13 billion, the small subreddit grew from a few hundred thousand to 9.3 million users, and a vocal poster with a name that I cannot repeat found himself testifying before Congress. 

Reddit is a social website that aggregates news, enables voting on web content, and provides a forum for discussion. It went from an obscure technophile-focused fan base to mainstream over the last 15 years. Users register and can then vote and post on communities called subreddits which cover topics from pop culture to science, day trading to kitty cats, and everything in between.

With a current valuation of over $6 billion and 430 million monthly active users, this interactive site is gaining on many of the more mainstream social platforms. What makes this site especially interesting for digital evidence is the breadth of topics covered and the ability to tie it back to a specific account.

In 2016, an IT professional associated with Hillary Clinton was identified as having posted about deleting a high profile person’s email address. His Reddit exchange was proffered as evidence in a house oversight committee meeting and may have had a not insignificant impact on the outcome of the election. 

In the weeks before the now infamous Musk tweet, members of the subreddit r/wallstreetbets noticed a pattern among several large hedge funds taking very large short positions on several businesses hurt by the pandemic (GME, AMC, NOK) and began to meme and post about “sticking it to Wall Street” by driving the price for these stocks up.  

Several of the most high-profile posters on the subreddit (which describes itself “like 4chan found a Bloomberg terminal”) helped raise the visibility of GameStop in particular and drove the price from $2.57 to a high of $483. What started out as more of a joke than anything resulted in large institutions like Melvin Capital and Citron Research facing a short squeeze (rapid price increase on previously shorted stocks) and losses in the billions of dollars.

Following the Musk tweet, large media outlets began to cover GameStop (which the subreddit called Gamestonk because of a meme) and the stock value skyrocketed. Trading platforms reacted by limiting stock purchases in a potentially illegal manner and Congress took notice.

Questions swirled around the true identity of the redditors leading the GameStop charge, and even claims of foreign interference to destabilize the economy. Keith Gill, the most vocal and visible of the posters with a name I cannot repeat, started his testimony with, “A few things I am not: I am not a cat. I am not an institutional investor. Nor am I a hedge fund."

The ability to crowdsource ideas and build movements that can have real world consequences and major financial impact has raised the visibility of Reddit as a potential source of evidence. As we speak, forensic accountants, financial crimes investigators, and ediscovery professionals are scouring through the last three months of posts on r/wallstreetbets and the posting history of people like Gill.

Reddit posts, like other social media posts, can be used as evidence in criminal or civil cases. Evidence of research done on Reddit implicated a man in his child’s murder and a viral video on Reddit landed a chair-throwing influencer in jail. While there is not yet much case law, the massive user base and visibility of the platform are increasing rapidly and the likelihood you will come across it as evidence is likewise rising.

Before turning to Reddit for evidence, practitioners should ensure that the data relates to the merits of the case and has sufficient relevance and uniqueness to justify the request of the court. 

Authentication and admissibility

As with all social media platforms, Reddit data is subject to Federal Rules of Evidence (also known as FRE) 901 requirements for admissibility. FRE 901 requires authentication of digital evidence — meaning, you have to be able to show that the evidence you’re presenting existed on that website and in the way that you’re claiming it looked. Screenshots alone are not sufficient to meet the requirement of authentication because they can be easily modified.

To establish authenticity, “the proponent must produce evidence sufficient to support a finding that the item is what the proponent claims it is.” and 901(b)(4) “distinctive characteristics” of a piece of evidence can be considered to establish its authenticity.” While this seems like a high bar, in practice it is a bit less stringent. Federal District Court Judge Paul Grimm’s shorthand for this rule: “If it looks like a duck, waddles like a duck, and quacks like a duck, it must be a duck.”

Forensic preservation 

Some social media platforms allow users to delete posts and/or have default settings that purge data over time. To avoid the risk of spoliation, use forensically sound technology to preserve the relevant account or subreddit data early in the process.

Ensure that you collect all relevant metadata as well to facilitate authentication of your digital copy of the relevant account. This includes the timestamp, URL, IP address, and date and time of access. 

Reliability

It is no secret that many social media users present only the rosiest of pictures and Reddit is no different. When using data from the platform, you need to be able to wade through the puffery, rhetoric, and overall chaos to get to reliable evidence. This often will require validation from additional data sources, like a trade database or other communication method. A fair amount of social media data on Reddit and other platforms is fake and should be carefully evaluated, externally validated, and vetted before presenting to the court.

Making sense of it all

A properly collected subreddit or Reddit account can contain thousands or hundreds of thousands of posts, comments, and users. To ensure that you are not drowning in data and can quickly find the relevant information necessary for fact-driven case development, be sure you are using a platform that enables you to search, sort, and analyze the text, images and emojis. Tools like DISCO AI can help legal practitioners analyze multiple social and traditional data sources and make correlations.