The article, published on Monday, highlighted a potential downside of 93 percent for MagneGas shares. The blogpost helped send the stock 20 percent lower, although the shares are still up 120 percent this year in a tough environment for the energy sector. The company – which turns waste liquids into fuel – has a market capitalization of just under $62 million and an annual turnover of $1.4 million, according to Reuters data.
The article was written under the pseudonym The Pump Stopper. The author stated above the article that he/she is not "receiving compensation for it" and has "no business relationship with any company whose stock is mentioned in this article." The writer wasn't immediately available for comment when contacted by CNBC via an online form on the author's personal website.
"People who know the company look at these points and say, 'You know, the vast majority of these are wrong, this guy should be arrested. He's a shorter. He's now profited by something, he's anonymous'," Santilli said.
"This has happened before, it'll happen again. Social media has really decentralized news. That coupled with very lax laws on shorting means that companies in the micro-(capitalized) space are really challenged with this from time to time."