Binance's BNB token and bitcoin (BTC) plunged Monday as a rumor spread that the crypto exchange's CEO faced an international law enforcement request to detain him.
Turns out, the catalyst for all this was an encrypted message contained in a tweet that was apparently not meant for the public's eyes – at least not yet – and that might've just been a wild guess.
"Interpol Red Notice for CZ," read the tweet from @cobie, who is followed by much of the crypto community. Not only is that account private, the text of the message was actually a garble of letters and numbers. It had been encrypted using the SHA-256 hash function, the same cryptography that secures many cryptocurrencies, including bitcoin.
But somebody figured out how to crack the post, and word spread. With Binance and its CEO, Changpeng "CZ" Zhao, having just been sued by U.S. regulators for "willful evasion" of U.S. laws, the idea that CZ might face a criminal probe rang true to many – and prices reacted accordingly as the rumor spread quickly. Binance's exchange token and bitcoin rapidly dropped.
Spokespeople for Binance and Interpol didn't respond to a request for comment. On Twitter, Binance Chief Strategy Officer Patrick Hillmann said, "One of two things is true: 1. It's bullsh-t; 2. A law enforcement agent is illegally leaking elements of a case file." He added: "My bet is #1."
Later Monday, @cobie said via Twitter that they'd posted the encrypted tweet after hearing a rumor. Effectively, @cobie was creating a record of something that they could reveal later they knew in advance – provided it came true. (The person could also just quietly delete the tweet and nobody would be the wiser that it was wrong.)
"The point of a hash commitment scheme is nobody is supposed to be able to read them until after the secret is revealed," @cobie tweeted. "Looks like someone I discussed the rumour with (handful of possible ppl) leaked the seed to 'create a stir' at my expense, removing the context of rumour, etc."
@cobie added: "Anyway, it was not supposed to be readable ever unless I revealed it, so sorry about that. Will once again narrow down the list of ppl I can trust. Since tweeting only leads to bad things instead of good things I will probably do much less in the future."
UPDATE (April 4, 2023, 02:03 UTC): Fully rewrites story to note the catalyst for the rumor was just a guess.
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