There were a couple of pretty broad indications that the announcement was a scam.
As pump-and-dump scams go, the September 13 press release announcing a partnership between Walmart and Litecoin was wildly successful.
“One of our social media team members was a little too eager and shared the story from the Litecoin Twitter account.”
There were a couple of pretty broad indications that the press release was a scam.
For one thing, the email provided for the media contact used the domain @walmart-corp.com. That led to a Namecheap page offering to sell the URL when typed into a browser on Monday morning, but now leads to a blank page. That’s not always something writers look at in the-race-to-be-first media age.
For another, the media contact listed was William White, the SVP and Chief Marketing Officer of Walmart — the No. 1 company on the Fortune 500 — who is too senior to be the press contact on a release announcing that Walmart was buying Arkansas outright, to say nothing of a cryptocurrency deal. He oversees all marketing for a company with 10,500 stores and eCommerce sites in 24 countries, serving 220 million customers a week.
That said, while it’s not the best-known cryptocurrency, decade-old Litecoin isn’t so unreasonable a choice for this kind of scam — at least from a crypto industry insider perspective. After all, PayPal selected LTC as one of the four cryptocurrencies it offered account holders the ability to buy and sell in November, along with Bitcoin, Ether, and Bitcoin Cash.
However, it also seems unlikely that a company as large as Walmart, and with as broad a demographic as Walmart, would completely ignore Bitcoin, which is far, far better known among the general public. Indeed, in covering the story after the hoax was revealed, a Bloomberg crypto reporter said:
“I haven’t heard of Litecoin in many moons.”
Globe Newswire, which appeared to be the initial source for the fake article, told CoinMarketCap that it promptly withdrew the press release and issued a Notice to Disregard as soon as it realized that a fraudulent user account was imitating Walmart. However, the announcement was online for about two hours before this happened. A spokesman added:
"This has never happened before and we have already put in place enhanced authentication steps to prevent this isolated incident from occurring in the future. We will work with the appropriate authorities to request — and facilitate — a full investigation, including into any criminal activity associated with this matter."
Charlie Lee, the cryptocurrency's creator and the managing director of the Litecoin Foundation, told Bloomberg that the group “really screwed up” by tweeting out the scam news — adding that it has upgraded its compliance procedure for tweets. He added that the foundation is a non-profit, so it doesn’t gain anything from pump-and-dumps — which is true so far as it goes.
Lee himself was widely criticized for selling all of his Litecoin in December 2017 after it spiked during the first crypto boom, causing the price to collapse. At the time, he said he did it to prevent the perception that he was pumping his own holdings when tweeting about Litecoin. He was asked pointedly by Bloomberg about his own Litecoin holdings on Tuesday, which he said are roughly 20 LTC.
That said, Mati Greenspan, founder of crypto research and analysis firm Quantum Economics, pointed out that there could well be “some element of trolling for shits and giggles.” He added that whether the person or persons who created the release “made money by playing the market with accurate timing is currently unknown.”
Another Regulation Argument
In his prepared remarks, released on Monday and almost certainly written well in advance, the former MIT cryptocurrency and blockchain professor repeated his opinion that there is not enough investor protection in any aspect of crypto, including finance, lending, and trading, as well as coin issuance. He said:
“Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted. This asset class is rife with fraud, scams, and abuse in certain applications.”
The problem, he added is the lack of clear regulation, he added — a refrain common in the cryptocurrency industry.
“Large parts of the field of crypto are sitting astride of — not operating within — regulatory frameworks that protect investors and consumers, guard against illicit activity, and ensure financial stability."
He added: “We can do better.”
Care to bet whether the Walmart-Litecoin pump and dump will be discussed, either by Gensler or by a senator overseeing the SEC?