On October 16, within an hour, news of a spot Bitcoin ETF approval sent the markets into a state of frenzy. As Bitcoin surged and then landed back down to earth, nearly $100 million worth of positions were liquidated.
The source of the news — a Cointelegraph post on X — has since been confirmed as false. But whilst the market quickly corrected, the reputational and legal fallout may not be over. With crypto community members crying “foul play,” let’s review what happened and what the consequences could be.
The crypto community had been waiting with bated breath for news of the first U.S spot Bitcoin ETF when yesterday afternoon (UTC), Cointelegraph posted on X that the Securities and Exchange Commission (SEC) had approved the BlackRock iShares ETF application.
Within minutes, the news had been shared on the Benzinga newswire and subsequently by Reuters, one of the world’s most trusted news agencies.
As was to be expected, the price of Bitcoin suddenly exploded, rising from $27,962 to $29,388 within approximately five minutes, according to CoinMarketCap. A price jump of nearly $1500, or five percent.
Within minutes of the original, Cointelegraph had added “reportedly” to the end of their breaking post on X. A telling correction that would be memed for much of the rest of the day.
As journalists rushed to their sources to verify the story, there appeared to be little to confirm the news. Then, 11 minutes after Bitcoin spiked, Eleanor Terrett, a journalist at Fox Business, posted that a source at BlackRock was confirming the story as false — their application was still under review.
Bloomberg analyst Eric Balchunas and CoinDesk followed shortly after to pour water on the story. Twenty minutes after Bitcoin had breached $29,000, it came crashing down to $27,855—marginally lower than it had been previously. A stunning and lightning-fast correction, and then it was all over.
A source from Cointelegraph confirmed to CCN that the incident was purely human error, miscommunication between the news and social media team, and failure to follow standard operating procedures.
However, the cause of the mishap appears to have been sloppy reporting at first glance. Noted crypto sleuth ZachXBT discovered a Telegram channel that had posted the exact same fake news reported by Cointelegraph 39 minutes before their initial X post. The publication later confirmed that this was the source of their story.
In an X post later in the day, Cointelegraph conducted a quick investigation. It found its process of verifying sources before posting breaking news on social channels was not followed.
At an event in Dubai, Cointelegraph editor-in-chief was in damage control mode, stressing that the pressures of digital journalism had helped create the conditions for the slip-up.
“This is what happens when we are having constant pressure to be the first with every news. It’s not a journalism problem, per se, it’s a problem of society and technology…If you’re not first, you’re last, and this is a big problem,” said Kristina Lucrezia.
However, those in the comments seemed generally unsympathetic. David Z. Morris , until recently a CoinDesk columnist, appeared unsurprised by the market-shaking gaffe, posting: “Cointelegraph? Unreliable dogshit? By JOVE.”
Tim Copeland, the editor-in-chief of The Block, shared a screenshot on X of an individual claiming to be behind the episode, who claimed to have made no profit from the sharp spike in Bitcoin’s price. “I was literally… shaking for a couple of hours straight when I heard what had happened,” he said .
Larry Elliot, the CEO of BlackRock, the original applicant behind the iShares spot Bitcoin ETF appeared a little more excited by the news and called it an example of “the pent-up interest in crypto,” according to Eleanor Terrett. An understatement for the ages.
However, not everyone was as chipper as the BlackRock CEO. Other spectators were loudly asking whether there had been any financial incentive for the misreporting.
Many questioned if this was a blatant case of market manipulation, with some speculating about jail time . Others highlighted the irony of the SEC’s reluctance to approve a spot Bitcoin ETF because of a risk of market manipulation when it appears an approval may not have been necessary at all.
The accusation is, either implicitly or explicitly, that a reporter, editor, or other staff member had taken out a short position in Bitcoin futures or options contracts. Therefore, leaving them primed for when the market suddenly changed.
As of yet, nobody directly affected by the market movement appears to have made those allegations explicitly to a regulatory body. If that were to happen, things could escalate quickly. After all, the SEC under Gary Gensler has a well-earned reputation as a crypto skeptic.
In response to the episode, the regulator advised readers to be “careful what you read on the internet. The best source of information about the SEC is the SEC.”