Author: David, Deep Tide TechFlow

The crypto market has its own "wolf is coming" story.

On August 3, the well-known foreign financial news platform First Squawk posted on social media: "China has officially banned cryptocurrency trading, mining, and related services, citing financial risks, capital flight issues, and environmental impacts."

Major overseas financial accounts with millions of followers, such as Investing.com and Rawsalerts, subsequently retweeted this unverified "breaking news." Clearly, using China's ban on cryptocurrency has become a traditional skill for spreading fake news in the crypto market.

In the comments section of this news, there was a humorous comment — Grok, asking me, how many times has China banned cryptocurrency now?

Veteran investors have long been fatigued by such fake news, and Bitcoin's price has already become immune to this type of misinformation.

However, there is indeed an absurd cycle in the crypto market — every so often, a highly influential piece of fake news will emerge.

You may be immune to the cycle of China's ban, but you may not be immune to the emergence of all fake news. When enough people believe that a piece of fake news will affect prices, it will indeed affect prices.

China's "ban" is just the tip of the iceberg regarding the entire crypto market's susceptibility to fake news. Looking back at the history of the crypto market's development, heavyweight fake news has genuinely influenced the direction of crypto assets;

And behind a piece of fake news, you can even see a hidden information dissemination chain.

Chronology of Crypto Fake News: From Amateur to Professional, Key Events Overview

2017: The Death of Vitalik, the First Lie in the Blockchain World

If one were to write an evolutionary history of fake news in cryptocurrency, June 26, 2017, would undoubtedly be a milestone.

That afternoon, a message appeared on the well-known foreign forum 4chan: "Vitalik Buterin has died in a car accident." There were no sources, no evidence, and not even decent details.

Yet, this crude rumor triggered the first market crash in cryptocurrency history caused by fake news within a few hours. At that time, ETH plummeted from $317 to $216 in just 6 hours, a drop of nearly 32%.

The Reddit r/ethtrader section was filled with posts asking, "Is this true?" "Can anyone confirm?" In Telegram groups, holders debated whether they should sell immediately.

About 10 hours after the rumor spread, Vitalik himself posted a photo on Twitter holding the Ethereum block number and hash value from that day to debunk the rumor, using the blockchain itself to prove he was still alive.

Vitalik is still here, but your position may be gone.

The market's reaction at that time revealed a harsh truth: in the early wild west of the crypto world, the destructive power of an anonymous post could rival that of an official announcement.

Early fake news creators were mostly amateur players. They either set up so-called insider groups on Telegram or posted on forums like 4chan. This was a market with extreme information asymmetry, where retail investors groped in the dark, and any slight movement could trigger a stampede.

Fake news during this period resembled pranks by a few individuals, closely tied to the project's founders; the market directly linked the personal safety of the founders to the survival of the project.

2018: Goldman Sachs Blunder, Wall Street Abandons Bitcoin

When fake news donned a suit, the destructive power of professional "exclusive news" was even greater.

On September 5, 2018, the cryptocurrency market was shrouded in the gloom of a bear market. At this sensitive moment, the well-known American business website Business Insider published a report with a headline that hit the nail on the head: "Goldman Sachs Shelves Cryptocurrency Trading Desk Plans."

The so-called "trading desk" is a department in investment banks that buys and sells specific financial products for clients. If Goldman Sachs really established a cryptocurrency trading desk, it would mean that its institutional clients could buy and sell Bitcoin through Goldman Sachs, which was seen as an important milestone for cryptocurrency gaining mainstream recognition; while "shelving" hinted at the abandonment of cryptocurrency.

The next day, the plot reversed. Goldman Sachs CFO Martin Chavez, when asked about this at the TechCrunch conference, left everyone speechless with his response: "I was wondering yesterday, when did I make this decision? This is fake news."

But the clarification came too late. In that panicked 24 hours, a large number of investors had already cut their positions and exited.

According to a Cointelegraph report at the time, Bitcoin and other digital currencies plummeted in price following this so-called fake news from "insider sources," with the total market value dropping by $12 billion in just one hour, and Bitcoin falling over 6% that day.

2021: Walmart and Litecoin Fake Partnership, Signs of News Trading Emerge

If the previous fake news could still be seen as misunderstandings or oversights, then the fake news about Walmart and Litecoin's partnership on September 13, 2021, was a premeditated crime.

At 9:30 that morning, one of the world's largest press release distribution services, GlobeNewswire, published an announcement.

The headline was eye-catching: "Walmart Announces Major Partnership with Litecoin." The press release was well-crafted, containing all the elements of a professional press release: Walmart's official logo, detailed cooperation plans, quotes from executives, and even contact information for the investor relations department.

The press release claimed that starting October 1, all of Walmart's e-commerce sites would offer the option to "pay with Litecoin." It also quoted Walmart CEO Doug McMillon as saying, "Cryptocurrency will play an important role in our digital strategy."

Subsequently, some crypto media outlets rushed to report this information, and most critically, the official Twitter account of the Litecoin Foundation retweeted this news.

At that time, when there was no "coin-stock linkage" play and crypto was not so mainstream, the market's reaction was explosive.

Litecoin's price began to rise vertically, and trading volume surged. Mainstream media also joined the dissemination chain — CNBC and Reuters reported successively; by 10:30 that day, Litecoin's price peaked, rising over 30%.

However, just as the market was caught in a frenzy, Walmart's PR team noticed the anomaly. After urgent verification, they released a statement: this was false news, and Walmart had no partnership with Litecoin.

After the news reversal, Litecoin's price plummeted like a free fall. But for the manipulators behind the scenes, the game was already over.

Subsequent investigations revealed that 48 hours before the fake news was released, there had been unusual bullish options trading for Litecoin in the market. The manipulators profited millions of dollars from this scheme through careful planning.

The terrifying aspect of this incident lay in its professionalism.

From registering similar domain names, creating fake press releases, to choosing the timing of the release and utilizing official account endorsements, every step was meticulously calculated. This was not the initial prank of fabricating Vitalik's death, but a more premeditated and organized crime, attempting to profit through news trading.

2023: Cointelegraph Misreporting, Traffic Over Truth

October 16, 2023, is a day worth reflecting on for the cryptocurrency media industry.

At 1:17 PM, a screenshot from a Telegram group began circulating in the crypto community. The screenshot showed a message allegedly from a Bloomberg terminal: the SEC had approved BlackRock's iShares Bitcoin spot ETF.

For cryptocurrency investors who had been waiting for years, this was undoubtedly a historic moment.

Cointelegraph's social media team saw this news. As one of the largest cryptocurrency media outlets globally, they certainly understood the weight of this news.

However, before publishing, they faced a dilemma: should they take the time to verify thoroughly, risking being scooped by other media? Or should they publish immediately to seize the traffic advantage?

At 1:24 PM, just 7 minutes later, Cointelegraph published this "breaking news" on its official X account. The tweet was very eye-catching: "Breaking: SEC Approves BlackRock Spot Bitcoin ETF."

The market's reaction was immediate and intense, with Bitcoin's price soaring from $27,900 to $30,000 in the next 30 minutes, an increase of over 7%; trading volume surged, and the servers of major exchanges felt the pressure. The derivatives market was even crazier, with $81 million in short positions being forcibly liquidated during this surge.

However, excitement quickly turned to confusion. Observant individuals began to raise questions:

Why was only Cointelegraph reporting this? Why was there no announcement on the SEC's official website, and why was BlackRock silent?

At 2:03 PM, 39 minutes after the tweet was published, Cointelegraph deleted the original tweet. But the damage had been done. In less than an hour, the market had experienced a complete cycle of rise and fall.

According to a subsequent investigation report released by the media, the error stemmed from a breakdown in internal processes — the social media editor violated the rule requiring editorial confirmation before publication.

This incident sparked intense discussions within the industry. A sharp viewpoint emerged, arguing that when media prioritizes speed over accuracy, they cease to be media and become tools for market manipulation.

Crypto media faces immense pressure. This is a 24/7 market where news can break at any time. If you are 5 minutes late, the traffic is snatched away by others. In this environment, publishing first and verifying later is a risky but potentially highly rewarding choice, but it may come at the cost of credibility.

In traditional financial markets, major news is usually released uniformly through official channels, with strict information disclosure rules. However, in the crypto market, information channels are decentralized, making it difficult to distinguish between truth and falsehood. A single screenshot or tweet can trigger billions of dollars in capital flow.

Ironically, when the SEC actually approved the Bitcoin ETF in January 2024, the market's first reaction was not one of celebration, but skepticism.

2024: SEC Twitter Incident, Regulators as Victims

In January 2024, the official X account of the SEC published false news about the approval of a Bitcoin ETF. According to subsequent FBI investigations, the attackers gained control of the account through a SIM card swap attack. After the fake news was released, Bitcoin's price rose from $46,600 to $47,680, and then fell to $45,627 after the rumor was debunked.

In October 2024, the FBI arrested suspect Eric Council Jr. Court documents revealed that this was a premeditated financial crime, with the attackers having established a large number of long positions in Bitcoin before releasing the fake news.

Over the past decade, cryptocurrency fake news has transitioned from "unintentional mistakes" to "premeditated crimes." The technical barriers, scale of funding, and level of organization have all upgraded; you may have dodged one instance of fake news, but you cannot guarantee that you won't fall victim to the next.

Three People Make a Tiger, When the Truth is Diluted

In the crypto market, tracking the source of a piece of fake news is often futile.

When news like "China bans cryptocurrency again" stirs the market, the sheer volume of retweets, algorithmic recommendations, and the increasing influence of self-media make it impossible to pinpoint where the information originally came from.

A typical path of crypto fake news dissemination can look like this:

• The first layer of the source is usually small Telegram channels or Discord groups, making it nearly impossible to trace back. The publishers often use anonymous accounts, suffering no loss even if exposed;
• The second layer involves the small circle fermenting the news among several related groups, starting to add "evidence" — PS-ed images, fabricated details, seemingly logical arguments, etc.;
• The third layer involves crypto media platforms giving the news a "quasi-official" color. Even if disclaimers like "according to informed sources" are used, readers often choose to ignore them.
• The fourth layer sees KOLs (Key Opinion Leaders) getting involved. Once the news spreads to a certain extent, KOLs face a choice: to post or not to post? Most choose a strategy of "retweeting but not endorsing" — using phrases like "it is said" or "there are reports that."
• The fifth layer is market reaction. Once prices start to fluctuate, the fake news gains "market validation." The drop itself becomes "evidence" of the news's authenticity.

When a piece of news has gone through multiple layers of dissemination, tracing back to the source becomes nearly impossible. Each layer of transmission adds new "details," introduces new interpretations, until the original information is completely diluted.

In the crypto market, rumors can spread irresponsibly and rapidly, while debunking them requires rigorous evidence and logic. Spreading panic or exclusive news may create trading opportunities, but spreading debunking news yields no direct benefits.

Each participant acts rationally based on their own interests, but all these "rational" choices combined create a collectively irrational outcome.

The market is repeatedly fooled by fake news, yet it seems no one can or wants to break this cycle.

This may be the new meaning of "three people make a tiger" in the crypto era: it is not that three people saying something will make it true, but rather that when enough people believe it will affect the market, it indeed affects the market.

In this process, the truth itself becomes less important.

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