X bans crypto reward apps: KAITO drops 20% as platform fights AI spam

Source: Yellow Original Title: X bans crypto reward apps: KAITO drops 20% as platform fights AI spam

Original Link: X revoked API access for apps that reward users for posting content, causing immediate losses in Information Finance tokens as the platform moves to eliminate AI-generated spam.

KAITO, the native token of the AI-powered InfoFi protocol Kaito AI, fell 20% from $0.70 to $0.56 following the announcement on January 15 by X’s product lead, Nikita Bier.

The policy change targeted so-called InfoFi platforms that track user interaction via X’s API and distribute crypto rewards based on posting activity and engagement.

Bier stated that the apps had generated a huge amount of AI junk and spam responses across the platform.

Market carnage in the InfoFi sector

The liquidation extended beyond KAITO to other staking-based tokens, with COOKIE from Cookie DAO dropping 15% and LOUD retreating 16% in the hours after the announcement.

Kaito’s Yapybaras NFT collection saw minimum prices plummet over 50% to 0.21 ETH, according to OpenSea data.

The overall InfoFi sector lost 11.5% of its market capitalization in 24 hours, reflecting concerns over projects heavily reliant on integrations with X.

Bier clarified that affected developers were already paying millions for Enterprise access to the API, emphasizing that X outright rejected the business model rather than seeking additional revenue.

Kaito shifts toward a traditional model

Shortly after X’s announcement, Kaito founder Yu Hu announced that the project would withdraw its Yaps rewards program and transition to Kaito Studio, a tier-based marketing platform.

Hu acknowledged that despite experimenting with eligibility filters and higher thresholds, quality issues persisted in crypto-focused social engagement programs.

The new model focuses on selective partnerships with content creators across multiple platforms, including YouTube and TikTok, moving beyond specific crypto verticals.

Crypto researcher ZachXBT praised X’s decision, stating that inorganic activity and fake metrics had made the platform nearly unusable.

The policy change leaves InfoFi projects built around post-to-earn mechanics facing fundamental questions about their business models, as X takes a firm stance against financially incentivized interaction.