Around 9AM EST, the value of Bitcoin began to soar higher. Breaking news had just hit the wire from a trusted source – CoinTelegraph. The news: Cointelegraph reported, “SEC approves Bitcoin Spot ETF.” Blackrock is a massive fund with a market cap of nearly $100 billion dollars – so this was a big deal. The only problem: The information was false.
Still, like a wildfire, the report spread across many other legitimate sources. Twitter’s Walter Bloomberg, TradeTheNews, and other mainstream media news outlets repeated the statement, and the value of Bitcoin continued higher, coming within striking distance of the 52-week high. Traders and investors jumped on the news, assuming the rally would continue. Except, it didn’t. Within a few moments, the price of Bitcoin fell as rapidly as it rose. However, for some traders, this was all it took to lock in serious profit.
With Bitcoin trading at just $27,277.61, one Rollbit account (a brokerage that allows leveraged Bitcoin positions) was able to “wager” $50,000 on a 50X multiplied Bitcoin long position. This means that for every dollar Bitcoin rose, this trader would receive $50. When Bitcoin popped, this trader locked in their profit at $2.2508 million dollars – an ROI of more than 4,400%. Their exit price: $30,274.68. It didn’t take long for the Rollbit screenshot to circulate on social media, with accusations thrown at Cointelegraph.
Let’s step back a second and look at the timeline of how this all took place.
Timeline: How Cointelegraph’s Bitcoin ETF Tweet Slipped Through the Cracks
09:17:30 AM Eastern Time: Cointelegraph’s editorial team was alerted to unverified news through a Telegram channel that the organization’s employees frequently use to discover potential story leads.
That Telegram group was called InfinityHedge. The user who posted the false news on Telegram, username “Deadlier,” later chimed in on how this came to be.
“I’m not connected to Cointelegraph in any way.
Cointelegraph took a random telegram and made news out of it. They forgot to use common sense.
I have informed about my side of things in detail to Zachxbt on Twitter DMs already.
My was harmless. And I have been in this infinityhedge channel/group months now. And people here know that I’m not a serious person for the most part.
Also, I did not profit from this in anyway. I haven’t taken any trade since 5 days, maybe more. That rollbit screenshot circulating is not mind. I don’t even have a rollbit account.
And I deleted my earlier Telegram account because I was panicked and worried. I was literally sitting on the floor and shaking for a couple of hours straight when I saw what happened.”
09:19:27 AM Eastern Time: A Cointelegraph employee (called employee 1 by Cointelegraph) reposted the contents of a now-deleted message from a Telegram account onto an internal Slack channel.
09:24:16 AM Eastern Time: In an effort to expedite the dissemination of breaking news, a different Cointelegraph employee (referred to as employee 2) published a report on Cointelegraph’s platform without obtaining prior verification from the editorial team. According to Cointelegraph, this action contravened Cointelegraph’s established social media procedures, which require source authentication and editorial endorsement before publication.
At roughly 9:30 AM EST, a Rollbit trader takes profit on their 50X leveraged Bitcoin long position, turning $50,000 into more than $2.25 million dollars, capturing the top of Bitcoin’s rally.
09:48:38 AM Eastern Time: Concerned readers reported the issue to Cointelegraph through various social media channels. Among those concerned readers included Bloomberg’s Eric Balchunas. At this time, Blackrock officially states that the ETF application is still under review by the SEC.
09:52:19 AM Eastern Time: Within an internal Cointelegraph discussion, Employee 1 raised concerns about the inability to confirm the source’s credibility.
09:54:14 AM Eastern Time: Employee 3, representing Cointelegraph, modified the message on their platform to explicitly state that the information remained unverified, adding the word, “Reportedly” to the tweet.
10:03:42 AM Eastern Time: Cointelegraph initiated contact with BlackRock and the Bloomberg Terminal and subsequently removed the initial post from their platform.
10:32:23 AM Eastern Time: After receiving confirmation from BlackRock that the report was indeed erroneous, Cointelegraph retracted the initial tweet and issued an apology.
This seemingly accidental turn of events sparked a wave of controversy across social media, with even the SEC tweeting, “Careful what you read on the internet. The best source of information about the SEC is the SEC.” Even Bitcoin related stocks, like Coinbase, felt the power of the pump and subsequent dump in the value of their assets.
What’s the lesson here? This issue probably wasn’t a masterminded attempt by some rogue trader to make money off of misinformation. It probably was an honest mistake, and one thing we know for sure is that these mistakes aren’t relegated to just crypto. In fact, seemingly small events have gigantic ripple effects across the market all the time.
That’s why options are such an important tool – there’s nothing better for hedging and protecting a portfolio from completely left-field events than options. Options allow traders and investors to take “insurance” on their long positions – insurance that can potentially save them from massive financial losses.
