Key Takeaways
- A fake press release claiming Walmart had partnered with Litecoin (LTC) caused the value to surge over 30%.
- Both Walmart and Litecoin later denied the news shared by GlobeNewswire, causing the prices to plunge.
- Major media houses believed news, causing a Litecoin employee to tweet the news on the company’s Twitter handle.
- The incident is a classic example of a pump-and-dump case.
YEREVAN (CoinChapter.com) — A fake press release about Walmart accepting Litecoin (LTC) payments sent its market into a frenzy.
Litecoin and the cryptocurrency market pumped when the partnership news between the US-based e-commerce giant Walmart and Litecoin broke out. According to the press release covered by big media houses and shared by Litecoin’s Twitter handle, customers could use LTC to pay for purchases on Walmart’s e-commerce websites.
Unfortunately, within minutes, Walmart drowned all excitement by denouncing the news as fake. To nobody’s surprise, the market dumped subsequently. However, by then, the trick had worked.
Whoever was behind this had pulled off a classic pump and dump scheme, potentially making a fortune in the process.
Pump and Dump is a malicious scheme used in trading that involves inflating (pumping) the price of a cheaply bought asset through misleading statements to sell (dump) it at a higher price.
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How it happened
The pump-and-dump sage erupted when GlobeNewswire, a US-based company that provides press release distribution services globally, on Monday published a press release claiming Walmart would allow shoppers to pay using Litecoin (LTC).
According to the announcement, beginning October 1, Walmart’s e-commerce stores would include a “pay with Litecoin” option.
Reputed media houses, such as Reuters and CNBC, fell for it and shared the press release on their platforms. Other media houses joined in, causing the news to spread like wildfire.
The fact that the official Twitter handle of Litecoin Foundation shared the fake news gave it more credit.
Later, Walmart spokesperson Randy Hargrove told CNBC the release was “not authentic,”
Both Reuters and CNBC later removed the false information and issued corrections.
The price of LTC nosedived as frantic buyers realized someone had pulled off a scam. Litecoin Foundation released a press release clarifying the error while GlobNewswire issued a notice to disregard.
GlobeNewswire also said they would work with authorities to find the culprits behind the hoax.
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Litecoin Creator Charlie Lee – “We Really Screwed Up”
After allegations of possible involvement in the artificial pump of LTC prices, Litecoin creator Charlie Lee went on Bloomberg TV to clarify the issue.
According to the former Google engineer, even he fell for the news before finding it was fake. Denying the possibility that anyone from his company was behind the fake news, Lee insisted he personally or the company had no incentive in issuing phony press releases.
Lee, however, took responsibility for Litecoin’s Twitter account, which had shared the fake news. According to Lee, one of their social-media team members believed the fake news because it was covered by Reuters and Retweeted it on the company’s handle. However, upon realizing that it was not what it seemed, he deleted it.
The Litecoin creator also said they now understand how influential Litecoin Foundation’s Twitter account is and that they will ensure proper fact-checking in the future before posting.
“I mean, we try very hard not to tweet fake news, and this time we really screwed up and we will try harder to not do that,”
Lee said.
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Litecoin prices pump over 30%, media questioned
Litecoin prices climbed more than 30% after the markets responded to the fake press release.
The altcoin rose to as much as $237.88, up around 36% in 45 minutes. Before the fake news frenzy, LTC was trading at $173.40, according to TradingView charts.
The incident raises questions about media professionalism, with some big media names failing to fact-check before publishing.
Crypto-sceptic Peter Schiff even blamed CNBC, claiming the network’s “crypto bias helped the fraudsters pull off this scam.”
The news did not only affect Litecoin (LTC). The price of Bitcoin (BTC) also surged, crossing the $47,000 mark before correcting again.
With the risk of regular pumps and dumps happening in the crypto industry, the incident will add to the pile of arguments calling for regulations.
In the meantime, Litecoin, ranked 15 by market cap, will look for solid reasons to help get back to the ATH of $410.26.
