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On Monday, Binance's BNB token and bitcoin (BTC) experienced a sharp drop in value following the circulation of a rumor that the crypto exchange's CEO had been subject to an international law enforcement request for his arrest.

It appears that the driving force behind all of this was a coded message concealed within a tweet that was seemingly intended for private consumption - or, at the very least, not intended for public release just yet - and which could have been nothing more than an unfounded conjecture.

The tweet from @cobie, a well-known figure in the cryptocurrency community, announced an "Interpol Red Notice for CZ." However, the tweet was written in a jumbled mix of numbers and letters and the account itself was set to private. This message had been encoded with the SHA-256 cryptographic hash function, which is also used to safeguard numerous cryptocurrencies such as Bitcoin.

However, someone managed to decipher the message and the news quickly circulated. The timing was significant as Binance and its CEO, Changpeng "CZ" Zhao, had recently been accused by U.S. regulators of intentionally evading U.S. laws. As a result, the prospect of CZ facing a criminal investigation resonated with many in the community, causing a swift and sharp decline in the value of Binance's exchange token and bitcoin as the rumor spread rapidly.

There was no response from representatives of Binance or Interpol when asked for comment. Meanwhile, Binance's Chief Strategy Officer Patrick Hillmann took to Twitter to address the issue. He stated, "There are only two possibilities: 1. It's nonsense; 2. A law enforcement officer is illicitly disclosing details from a case file." Hillmann went on to say, "My guess is #1."

 

Later on Monday, @cobie explained on Twitter that they had shared the encrypted tweet based on a rumor they had heard. Essentially, @cobie was establishing a record of their knowledge of the rumor in case it turned out to be true and they could reveal it later. Alternatively, they could simply delete the tweet without anyone knowing if the rumor turned out to be false.

"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."