The rise and fall of Bitcoin driven by fake news: What happened, and what lies ahead for Bitcoin spot ETFs?

2023.10.25

The rise and fall of Bitcoin driven by fake news: What happened, and what lies ahead for Bitcoin spot ETFs?

The best source of information about the SEC is the SEC itself.

2023.10.25 - 03:40:02

SEC

Navigating Web3 tides with focused insights

The best source of information about the SEC is the SEC itself.

Author: veDAO

Will the BTC ETF be approved? Last night, BlackRock pulled another prank on us.

Yesterday, news spread that BlackRock's iShares Bitcoin Trust had been listed on the DTCC website, causing a stir across social media. However, DTCC quickly removed the related entry for BlackRock and, upon relisting, changed the Create/Redeem field from Y to N.

This was not the only such incident.

On October 16, within just one hour, a piece of news about the approval of a spot Bitcoin ETF sent the market into frenzy. As Bitcoin’s price surged and then rapidly dropped, nearly $100 million in positions were liquidated.

The source of this news was a tweet posted by Cointelegraph on X, later confirmed as fake. Although the market quickly corrected itself, reputational and legal consequences may still linger. With members of the crypto community shouting “malpractice,” let’s review what happened, along with potential repercussions and implications.

Timeline of the Fake News Incident

Origin

The crypto community has been eagerly awaiting news of the first U.S. spot Bitcoin ETF. At around 9:30 PM Beijing time on October 16, Cointelegraph tweeted that the U.S. Securities and Exchange Commission (SEC) had approved BlackRock’s iShares ETF application.

Within minutes, the story was picked up by financial media outlet Benzinga and subsequently reported by Reuters—one of the world’s most trusted news agencies. Unsurprisingly, Bitcoin’s price suddenly spiked, and the entire market quickly turned bullish. According to CoinMarketCap, Bitcoin’s price jumped from $27,962 to $29,388 in about five minutes—an increase of nearly $1,500, or approximately 5%.

A few minutes after the initial post, Cointelegraph issued a follow-up tweet identical to the first, except it added the word “reportedly” at the end. This subtly suggestive edit became the day’s most hilarious meme.

Doubt Emerges

As journalists scrambled to verify the news, evidence confirming the report proved hard to find. Then, 11 minutes after Bitcoin’s price spike, Fox Business reporter Eleanor Terrett tweeted that a source at BlackRock confirmed the news was false—their application was still under review. Bloomberg analyst Eric Balchunas and CoinDesk later echoed this, debunking the false report. Twenty minutes after Bitcoin broke $29,000, it plunged to $27,855—slightly below its previous level.

Source of the False Information

At first glance, the cause seemed to be sloppy reporting. Crypto investigator @ZachXBT discovered a Telegram channel where a user had posted the exact same fake news 39 minutes before Cointelegraph’s tweet. Cointelegraph later confirmed this was their source.

Later that day, Cointelegraph conducted a quick internal review. They admitted they had failed to follow proper procedures for verifying sources before publishing breaking news on social media. The outlet described the incident as a purely human error—a communication breakdown between editorial and social media teams that bypassed standard operating protocols.

Meanwhile, at an event in Dubai on the 16th, Cointelegraph’s editor-in-chief Kristina Lucrezia highlighted the pressures of digital journalism behind the mistake: “When we’re constantly pressured to break every story first, things like this happen. It’s not just a journalism problem—it’s a societal and technological one… If you’re not first, you’re last, and that’s a big issue.” However, the crypto community showed little sympathy.

On October 17, The Block’s editor-in-chief Tim Copeland shared a screenshot on X of someone claiming to be the mastermind behind the incident. The individual claimed he did not profit from Bitcoin’s sharp rise: “When I heard what happened, I literally… trembled for hours.”

Possible Market Manipulation?

Many crypto KOLs questioned whether there was any financial motive behind the erroneous report. Many speculated whether this was an outright case of market manipulation, while others guessed someone might end up in jail. Some even suggested the SEC has been reluctant to approve spot Bitcoin ETFs due to fears of market manipulation—and now, perhaps, no approval is even needed.

These accusations, whether implicit or explicit, point toward the possibility that a journalist, editor, or staffer established a short position in Bitcoin futures or options contracts, positioning themselves to profit from sudden market shifts.

So far, no individuals affected by the market volatility have formally filed these allegations with regulators. If such complaints emerge, the situation could escalate quickly. After all, the current SEC leadership is known among crypto circles as staunch skeptics.

In response to the incident, the regulator advised readers: “Be cautious about information on the internet. The best source of information about the SEC is the SEC itself.”

Aftermath and Implications

Market Sentiment

Second: 2023/10/19

Third: 2024/01/17

Final Deadline: 2024/03/19

Latest Update: No update to application in response to SEC

SEC Filing:

https://www.sec.gov/Archives/edgar/data/0001841175/000138713121001118/valkyrie-s1_012221.htm

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The rise and fall of Bitcoin driven by fake news: What happened, and what lies ahead for Bitcoin spot ETFs?

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The rise and fall of Bitcoin driven by fake news: What happened, and what lies ahead for Bitcoin spot ETFs?