Litecoin: fake news on Walmart highlights how vulnerable cryptocurrencies are to scams

Litecoin: fake news on Walmart highlights how vulnerable cryptocurrencies are to scams


The fake news relating to the introduction of payments via litecoin by Walmart, which spread a few days ago, highlighted once more how vulnerable the cryptocurrency market is to scams. In fact, a scam statement was enough to send Litecoin into orbit before returning to crash to the ground, with considerable losses for investors.

Walmart said earlier this week that it was the subject of a " fake press release ”, in which it was claimed that the giant had reached an agreement with litecoin to accept the cryptocurrency as a payment. Skeptics were quick to point out the strangeness of the deal between the famous retailer and a cryptocurrency that has largely operated in the shadow of the larger cryptocurrencies like ethereum or bitcoin.

Perhaps to give more credibility to the news contributed a report last August that Walmart was looking to hire someone to develop a digital currency road map, even joining in looking for ways to allow customers to pay for goods with cryptocurrencies, yet it seemed unorthodox. for the company to announce its crypto plan without first appointing an executive to fill that new role.

The Litecoin Foundation has not entered into a partnership with Walmart.

- Litecoin Foundation (@LTCFoundation) September 13, 2021

On Monday, Walmart said it had "no knowledge of the Globe Newswire press release" and pointed out that it "has no relation to Litecoin." Thus, after a brief increase of more than 20%, litecoin fell by nearly 3% to $ 179.33. John Wu, a cryptocurrency expert, former venture capitalist and president of Ava Labs, said in email comments that he expects more scams like this to occur in the near future. “Fake ads are nothing new, but the fact that a scammer is willing to go this far shows that the old ways no longer work. Unfortunately, today's stunt will discourage those who are skeptical of cryptocurrency and contribute to the narrative surrounding volatility and instability, ”Wu wrote.

Meanwhile, a survey conducted by the Motley Fool found that nearly 26,500 crypto scams were reported to the government in 2020, totaling $ 419 million in losses, figures that are expected to be surpassed in the current year. According to the survey, in fact, more than 14,000 investment scams reported to the Federal Trade Commission in the first quarter of 2021 alone, with approximately $ 215 million in losses.

Crypto billionaire Mike Novogratz says he wasn't quick enough to short litecoin on the fake Walmart news that made no sense to him

GettyImages 1036973538Mike Novogratz.
  • Mike Novogratz said he wasn't quick enough to short litecoin, as the Walmart tie-up got debunked swiftly.
  • 'I scratched my head - like, who would buy litecoin and why?' he said at the SALT Conference Tuesday.
  • Galaxy Digital CEO Novogratz said he hopes the fraudsters end up getting arrested.
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  • Galaxy Digital CEO Mike Novogratz said he wasn't quick enough to short litecoin after hearing Walmart would allow its shoppers to pay with the cryptocurrency, news that later turned out to be fake.

    'Some jackasses posted a fake press release from Walmart that they were buying litecoin,' Novogratz said at the SALT Conference on Tuesday. 'I scratched my head - like, who would buy litecoin and why?'

    'Made no sense to me. But I wasn't quick enough to short it, and that, of course, turned out to be fraud,' he added. To short an asset means the investor is betting its price will decline, with the aim of pocketing a profit.

    A false press release distributed by GlobeNewswire on Monday claimed that US retail giant Walmart planned to accept litecoin as payment beginning October 1, though it was deleted after a few hours.

    Litecoin's price initially spiked as much as 25%, but pulled back sharply after a Walmart spokesperson confirmed to CNBC that the announcement was untrue. The cryptocurrency's creator, Charlie Lee, then told Bloomberg the Litecoin Foundation 'really screwed up' after an overeager employee retweeted the fake news.

    Crypto billionaire Novogratz said he hopes the scammers, who set up a website alongside the official-looking press release, are found and detained.

    'Hopefully they end up getting arrested,' he said, adding that he expected there to be cases of fraud in any popular industry.

    Litecoin was last trading at $182 per coin, up 0.8%, on Wednesday, according to data from CoinDesk. It isn't among the top 10 cryptocurrencies by market capitalization and isn't as popular as other mainstream coins among enthusiasts.

    Bitcoin bull Novogratz also touched on policymakers' concerns about cryptocurrency's use in illicit payments, and warned that unsuitable regulation could decelerate the industry's growth.

    'A lot of the backlash from politicians and regulators that aren't educated is all this stuff's all used for bad shit. You couldn't be further from the truth,' Novogratz said.

    Gary Gensler, the chair of the Securities and Exchange Commission, has compared the crypto industry to the 'Wild West' for its lack of investor protection and wants more regulatory oversight of the market. He called Tuesday for crypto exchanges to register with the regulator if they offer securities, days after the SEC threatened to sue Coinbase over an interest-bearing product.

    'What could go wrong is we could have some really crappy regulation which will slow things back,' Novogratz said, adding it may hold back development of the next, decentralized, stage of the web and internet. 'If the US and Europe don't get regulation right, it will slow the growth of Web 3 immensely.'

    Read More: Inside the SALT NY conference: 4 of the most influential crypto experts break down the biggest opportunities in the space - and share where the industry will be 10 years from now