Cryptocurrencies are no strangers to rumors and FUD (fear, uncertainty, and doubt), and the latest incident involving Binance’s BNB token and bitcoin is a prime example. On Monday, both assets took a plunge as a rumor spread that the crypto exchange’s CEO faced an international law enforcement request to detain him. However, it turns out that the source of this information was not much more reliable than a guess.
The catalyst for the chaos was an encrypted tweet that was apparently not meant for public consumption – at least not yet – and might have been nothing more than a wild guess. The tweet, sent from the private account @cobie, contained an encrypted message that read, “Interpol Red Notice for CZ,” referring to Binance CEO Changpeng Zhao.
The text of the message was a garble of letters and numbers encrypted using the SHA-256 hash function, the same cryptography that secures many cryptocurrencies, including bitcoin.
The impact of the rumor was immediate, with bitcoin dropping by $1K within minutes. Famous crypto attorney John Deaton commented on the situation, stating that if such rumors can have such an impact, one can only imagine the effects of word getting out about a bank having issues or potential insolvency once the Federal Reserve’s FedNow system is operating 24/7.
While Binance CEO Changpeng Zhao acknowledged the incident on Twitter, he dismissed it as FUD spread by crypto news outlets and key opinion leaders (KOLs), likely planted or sponsored by another exchange. He went on to say that this kind of behavior hurts the industry and needs to stop, emphasizing the need for the industry to unite at this juncture. This incident comes amid Binance and CZ being sued by U.S. regulators for willful evasion of U.S. laws.
