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Fake news release takes Bitcoin Cash for 12-minute joyride

By Gregory Boyd

18:31, 5 November 2021

Image of since-removed fake news release
The news release announcing Kroger would accept BCH was removed after publication - Photo: Shutterstock

If it was a scam, it may have taken days or weeks to set it up.

Or it may have been an elaborate joke.

If it was a fraud, the payoff took just 12 minutes.

At 07:30 EDT (UTC -4) on Friday, PRNewswire issued a news release on behalf of Kroger saying the US retailer would start accepting the Bitcoin Cash cryptocurrency (BCH) on 1 December. An automated web widget placed the same release on Kroger’s own company news page.

This was good news for BCH. Trading volume, sitting at under 10 units a minute at that time of day, jumped to over 300 units in the first minute and kept rising as some buyers saw an opportunity. (Trading data here is from TradingViews.)

The price rose too, of course. Starting at a narrow range around $602.56 it increased by $7 in the first five minutes and peaked 12 minutes after the news release at $636.04. Hundreds of coins were changing hands per minute then.  

As the price hit $636, the tide turned. Sellers started selling and the price descended even more quickly than it rose.

By then over $6m worth of BCH had changed hands. Trading volume over those 12 minutes reached a level that would take 8 hours on an average day.

At 07:55 EDT (UTC -4) the Reuters news agency spoiled the party. A Reuters reporter made contact with a Kroger spokesperson who said the news release was fake. A Reuters story was widely released by 7:55.

The potential take, if it was a scam, was a little over $149,000, based on trading data.

SOL/USD

181.07 Price
-1.890% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

ETH/USD

3,449.98 Price
-1.630% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

DOGE/USD

0.14 Price
-2.080% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

BTC/USD

67,688.65 Price
-0.260% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

Cision, the parent of PRNewswire, failed to respond to a request for comment on the incident. Kroger also failed to respond to a request for comment.

At 11:39 EDT (UTC -4), more than four hours after the fake news release was published, Kroger said this on Twitter: “ICYMI: This morning a press release was fraudulently issued claiming to be The #Kroger Co. that falsely stated the organization will begin to accept Bitcoin Cash. This communication was fraudulent and is unfounded and should be disregarded.”

Two months ago, a hoax news release reported that retail giant Walmart would begin accepting Litecoin payments. The cryptocurrency gained nearly 30% at its peak that day before falling to 3% below where it started.

Read more: Kroger reports strong second quarter, raises 2021 guidance

The difference between stocks and CFDs

The main difference between CFD trading and stock trading is that you don’t own the underlying stock when you trade on an individual stock CFD.

With CFDs, you never actually buy or sell the underlying asset that you’ve chosen to trade. You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional stock trading you enter a contract to exchange the legal ownership of the individual shares for money, and you own this equity.

CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional stock trading, you buy the shares for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks.

CFDs attract overnight costs to hold the trades, (unless you use 1-1 leverage)

which makes them more suited to short-term trading opportunities. Stocks are more normally bought and held for longer. You might also pay a stockbroker commission or fees when buying and selling stocks.

Markets in this article

BCH/USD
Bitcoin Cash / USD
388.30 USD
-8.95 -2.260%
KR
The Kroger Co.
54.92 USD
0.34 +0.620%
KR
The Kroger Co.
54.92 USD
0.34 +0.620%

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