On Thursday, reports emerged that Binance’s Shanghai office had been raided by local police and was subsequently shut down. The CEO of the cryptocurrency exchange, Changpeng Zhao, has since refuted the claims, while also saying that it’s FUD of the kind that damaged Bitcoin’s price in the past couple of days.
Cryptocurrency news media The Block reported on November 21st that the Shanghai office of Binance had shut down due to a clamp down by authorities. According to the news outlet’s sources, between 50 and 100 employees and executives worked out of the office.
Changpeng Zhao, the CEO of Binance, has since refuted those claims, saying that there was “no police, no raid, no office.”
No police, no raid, no office. Hope you didn’t pay to read that FUD block. pic.twitter.com/W2msvY2hSA
— CZ Binance (@cz_binance) November 22, 2019
This quickly caused a storm within the cryptocurrency community, and it became one of the most widely-discussed topics over the past two days, especially following the recent Bitcoin price action.
Zhao has stated numerous times that the erroneous reporting has hurt Binance’s reputation and has already expressed his intentions to take The Block to court.
Moreover, he also said that it has caused damage to Bitcoin’s price. Indeed, Bitcoin crashed yesterday, starting the day above $8,000 and recording a low of nearly $6,700. This marked a daily decline of around 17%. Since then, the price has recovered a bit, and it currently trades at $7180.
Instead of apologizing to the community for the fake headline news of the non-existent “police raid”, which damaged our reputation, and $btc price, theBlock now tries to argue if there was an office, if CZ had a meeting… who cares?
Own up & apologize for your mistake. http://t.co/PWjQ7FzEc6
— CZ Binance (@cz_binance) November 23, 2019
Whether or not the news is real or fake, any reputable media outlet should understand the weapon it’s holding. Relying on unverified sources can, indeed, cause panic-sell due to the snowball effect that viral news can have.
In regards to whether this alone can be the trigger for the severe price drop Bitcoin saw over the past day, in my opinion, other reasons like the news regarding the Chinese crypto ban are more likely to be the cause.
Today, thankfully, that’s not the situation anymore. Binance is, indeed, the biggest cryptocurrency exchange, but we shouldn’t forget that it migrated out of China long ago, and is now headquartered in Malta.
The exchange also opened smaller offices around the world over the past year. Hence, even if the news was accurate, it’s hard to imagine that raiding empty offices could cause Bitcoin to tumble more than $1,500 in just a single day.
This could have been true for no doubt if we were in the year of 2014 and the exchange name was not Binance but Mt. Gox. Back in those early days of cryptocurrency trading, Mt. Gox had captured almost the whole market, hence, any negative news regarding the platform had a fatal effect on Bitcoin. In the days following the Mt. Gox crash, the price of Bitcoin crashed more than 70%.
Yet, it’s essential to take this opportunity as a news outlet and emphasize the importance of fact-checking. It’s imperative to trust only verified sources when it comes to the accuracy of any news that comes out. It today’s world, it doesn’t take a lot to cause a lot of damage, especially with fake news.