The Recurring China "Ban": How Crypto Fake News Evolved Over 10 Years

The crypto market has its own version of "The Boy Who Cried Wolf."

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

Major overseas financial accounts with millions of followers, including Investing.com and Rawsalerts, subsequently reposted this unverified "breaking news." Playing the "China bans crypto" card has clearly become a tired trope, a recurring act in the theater of crypto misinformation.

In the comment section of that message, there was an amusing comment: "Grok, tell me, how many times has China banned cryptocurrency now?"

Veteran traders have become desensitized to this kind of misinformation, and Bitcoin's price barely reacts to these stories anymore.

However, the crypto market does have an absurd cycle: every so often, an extremely influential piece of fake news appears.

One might be immune to the China ban cycle, but not necessarily immune to all fake news occurrences. When enough people believe a certain piece of fake news will affect prices, it really does affect prices.

China's "ban" is just the tip of the iceberg of the entire crypto market being affected by fake news. Looking back at the entire development history of the crypto market, those heavyweight fake news stories have genuinely influenced the direction of crypto assets.

Behind each piece of fake news, one can even see a hidden information dissemination chain.

Chronicles of Crypto Fake News: From Amateur Hoaxes to Professional Schemes

1. 2017: The "Death" of Vitalik and Blockchain's First Big Lie

Charting the evolution of crypto fake news, June 26, 2017, marks a turning point.

That afternoon, a post appeared on the notorious 4chan forum: "Vitalik Buterin has died in a car crash." No source. No photo. No details.

Yet this crude hoax triggered the first major fake news-induced crash in crypto history. Within six hours, ETH plummeted from $317 to $216, a devastating 32% drop.

Reddit's r/ethtrader was flooded with anxious threads: "Is it true?" "Can anyone confirm?" Telegram groups spiraled into panic.

Roughly 10 hours later, Vitalik himself posted a photo holding a paper with the current Ethereum block number and hash, providing literal on-chain proof of life.

Vitalik survived, but many portfolios didn’t.

This moment revealed a harsh truth: in crypto's Wild West era, even an anonymous post could trigger panic equivalent to official announcements.

Fake news in this era was more akin to mischief by a handful of actors, linked to project founders. Meanwhile, markets directly equated founders' personal wellbeing with project survival.

2. 2018: The Goldman Sachs "Pullout," When FUD Wears a Suit

When fake news puts on a suit, professionalized "exclusive reports" become far more destructive.

On September 5, 2018, the cryptocurrency market was shrouded in bear market gloom. At this sensitive moment, prominent American business website Business Insider published a report with a devastating headline: "Goldman Sachs is shelving its plans for a crypto trading desk."

A "trading desk" refers to an investment bank's department that buys and sells specific financial products for clients. If Goldman Sachs had truly established a cryptocurrency trading desk, it would have meant institutional clients could trade Bitcoin through Goldman, viewed at the time as a crucial milestone for mainstream crypto adoption. The word "shelving" carried implications of abandonment.

The next day brought a dramatic reversal. When Goldman CFO Martin Chavez was asked about the matter at the TechCrunch conference, his response left everyone stunned: "I was wondering yesterday when I made this decision. This is fake news."

However, the clarification came too late. During those panic-filled 24 hours, countless investors had already cut their losses and exited.

According to Cointelegraph reports at the time, Bitcoin and other digital currencies plummeted after this supposedly "insider-sourced" fake news. Total market cap dropped $12 billion within one hour, with Bitcoin falling over 6% that day.

This episode marked a significant shift: fake news no longer originated solely from fringe actors. Now, even respected media outlets could spread devastating misinformation, whether through error or negligence.

3. 2021: Walmart and Litecoin Fake Partnership, The Dawn of News Trading

If previous fake news incidents could still be attributed to misunderstandings or negligence, then the fake Walmart-Litecoin partnership news on September 13, 2021, was nothing short of premeditated crime.

That morning at 9:30 AM, an announcement appeared on GlobeNewswire, one of the world's largest press release distribution services.

The headline was eye-catching: "Walmart announces major partnership with Litecoin." The press release was professionally crafted, containing all the elements of a legitimate corporate announcement: Walmart's official logo, detailed partnership plans, executive quotes, and even investor relations contact information.

The press release claimed that starting October 1, all Walmart e-commerce websites would offer "pay with Litecoin" options. It even quoted Walmart CEO Doug McMillon: "Cryptocurrency will play an important role in our digital strategy."

Subsequently, crypto media outlets began racing to report this information. Most crucially, the Litecoin Foundation's official Twitter account retweeted the news.

In an era before "crypto-stock correlation" became commonplace and crypto hadn't yet gone mainstream, the market's reaction was explosive.

Litecoin's price began climbing vertically with trading volume surging. Mainstream media joined the propagation chain as CNBC and Reuters reported the story. By 10:30 AM that day, Litecoin reached its peak with gains exceeding 30%.

However, just as the market was caught up in euphoria, Walmart's PR team noticed something amiss. After urgent verification, they issued a statement: this was false news, and Walmart had no partnership relationship with Litecoin whatsoever.

Following the news reversal, Litecoin's price fell like a free-falling object. For the behind-the-scenes manipulators, though, the game was already over.

Subsequent investigations revealed abnormal bullish Litecoin options trading in the 48 hours before the fake news release. The manipulators profited millions of dollars through this carefully orchestrated scheme.

The terrifying aspect of this incident lay in its professional execution.

From registering similar domain names and crafting fake press releases to timing the release and leveraging official account endorsements, every step was precisely calculated. This wasn't like the initial prank of fabricating Vitalik's death; rather, it represented a more premeditated, more organized crime attempting to profit through news trading.

4. 2023: Cointelegraph Misreport, Chasing Traffic Over Truth

October 16, 2023, was a day worthy of reflection for the cryptocurrency media industry.

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

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

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

However, before publishing, they faced a dilemma: spend time thoroughly verifying the information and risk being scooped by other media, or publish immediately and capture the traffic advantage?

At 1:24 PM, just 7 minutes later, Cointelegraph posted this "breaking news" on their official X account. The tweet was eye-catching:

The market's reaction was immediate and dramatic. Bitcoin's price surged from $27,900 to $30,000 in the following 30 minutes, a gain of over 7%. Trading volume exploded instantly, and major exchange servers strained under the traffic. The derivatives market went even crazier, with $81 million in short positions being forcibly liquidated during this surge.

Soon after, excitement quickly turned to confusion. Careful observers began raising questions:

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

At 2:03 PM, 39 minutes after posting the tweet, Cointelegraph deleted the original tweet. The damage, however, had already been done. In less than an hour, the market had experienced a complete boom-bust cycle.

According to the investigation report subsequently published by the media outlet, the error stemmed from an internal process breakdown. The social media editor had violated the requirement for editorial confirmation before publishing.

This incident sparked fierce debate within the industry. One sharp perspective argued that when media prioritizes speed over accuracy, they are no longer media but tools for market manipulation.

Crypto media faces enormous pressure. This is a 24/7 market where news can break at any moment. Being 5 minutes late means traffic gets stolen by competitors. In this environment, "publish first, verify later" becomes a risky but highly profitable choice, though it may come at the cost of credibility.

In traditional financial markets, major news is typically released through official channels with strict information disclosure rules. In contrast, information channels in crypto markets are scattered and truth is hard to distinguish from fiction. A single screenshot or tweet can trigger billions of dollars in capital flows.

Ironically, when the SEC actually approved the Bitcoin ETF in January 2024, the market's first reaction wasn't celebration but suspicion.

5. 2024: SEC Twitter Incident, When Regulators Become Victims

In January 2024, the official SEC X account posted a fake Bitcoin ETF approval message. According to subsequent FBI investigation, attackers gained account control through a SIM card swap attack. Bitcoin's price rose from $46,600 to $47,680 after the fake news was published, then fell to $45,627 after the denial.

In October 2024, the FBI arrested suspect Eric Council Jr. Court documents revealed this was a premeditated financial crime, with the attacker having established substantial Bitcoin long positions before publishing the fake news.

Over ten years, cryptocurrency fake news has completed its transformation from "unintentional mistakes" to "deliberate crimes." The technical barriers, funding scale, and organizational sophistication have all escalated. One might dodge a particular fake news incident, but there's no guarantee of avoiding the next one.

When Truth Gets Diluted

In crypto markets, tracing the source of fake news is often futile.

When messages like "China bans crypto again" create waves in the market, the massive amount of reposts, algorithmic recommendations, and the growing influence of self-media make it impossible for anyone to trace where the information originally came from.

A typical crypto fake news propagation path looks like this:

First Layer: The Source is usually small Telegram channels or Discord groups, making tracking the origin nearly impossible. Publishers often use anonymous accounts, suffering no loss even when exposed.

Second Layer: Small Circle Amplification spreads across several related groups, beginning to add "supporting evidence" such as photoshopped images, fabricated details, and plausible-sounding logic.

Third Layer: Crypto Media Platforms give the message a "quasi-official" appearance. Even when using disclaimers like "according to insiders," readers often selectively ignore these caveats.

Fourth Layer: KOL Intervention occurs when the message spreads to a certain extent and influencers face a choice: share or not share? Most choose a "repost but don't endorse" strategy, using phrases like "allegedly" or "sources claim."

Fifth Layer: Market Reaction happens once prices start fluctuating, giving fake news "market validation." The decline itself becomes "evidence" of the message's authenticity.

When a message goes through multiple layers of propagation, tracing its source becomes nearly impossible. Each layer of transmission adds new "details" and introduces new interpretations until the original information is completely diluted.

In crypto markets, rumors can spread irresponsibly and rapidly, while debunking requires rigorous evidence and logic. Spreading panic or exclusive news may bring trading opportunities, but spreading refutations offers no direct benefits.

This might be the new meaning of the Chinese proverb "three men make a tiger" in the crypto era: it's not that three people saying something makes it true, but when enough people believe it will affect the market, it really does affect the market.

In this process, truth itself becomes less important.