Nov 14, 2023 - Business

Fake filing spurs short rally during crypto ETF frenzy

Data: CoinGecko; Chart: Axios Visuals
Data: CoinGecko; Chart: Axios Visuals

When markets are primed for good news, it pays to be a bit more discerning.

Driving the news: Some crypto investors got taken for a ride Monday when a person impersonated asset management giant BlackRock in an official state filings database, which catalyzed a brief pop in the XRP coin.

Details: BlackRock submitted a filing with the SEC last week for a spot exchange-traded fund (ETF) backed by ether, the world's second biggest cryptocurrency.

  • It didn't file for any products related to the smaller coin, XRP.
  • The public was duped into thinking it had, though, when the scammer impersonated the asset manager in a Delaware trust filing.

Quick take: It is wild that someone filed pretending to be BlackRock.

Between the lines: The bad actor(s) would appear to have reverse-engineered the firm's filing process, according to someone familiar with the ETF filing procedures.

  • BlackRock had filed to form an ETH trust in Delaware just a week earlier.

Be smart: It would be hard to detect the difference between the real and the fake one because the fake XRP filing showed the real name of a BlackRock executive.

  • Search "iShares ETH" on the Delaware division of corporations website, then do it again for "iShares XRP."

Of note: The Delaware agency declined to respond to Axios' emailed queries about whether it conducted identity verification before accepting a trust filing, but said it has referred "the matter" to the Delaware Department of Justice.

The intrigue: When BlackRock set the record straight about the filing, the gains on XRP evaporated, but folks started to question the validity of BlackRock's real filing for ETH.

Zoom in: That would explain the dent in the ETH rally yesterday, though, prices still remain above $2,000.

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