In what appears to be a hugely successful “pump and dump” scheme, Litecoin cryptocurrency rose about 25% after a fake press release claimed Walmart would begin accepting Litecoin payment for online purchases.
How did this happen?
Investors had good reason to believe the news was true: A verified Litecoin Twitter account tweeted the link to the announcement, which appeared on GlobeNewswire news service.
The press release sounded real enough, including (fabricated) quotes from Walmart CEO Doug McMillon. Walmart had recently posted a job posting looking for a cryptocurrency expert to work at its corporate headquarters. And several major newspapers have picked up the news.
The announcement, however, was false, a Walmart spokesperson confirmed. Walmart is not accepting Litecoin and Litecoin deleted its tweet. An hour after the announcement, Litecoin's price dropped from more than $ 299 to $ 242 - around where it was trading before the fake announcement came out. It is not yet clear who the scammers are, but the scheme is likely a so-called "pump and dump".
What is a pump and dump scheme
It's when people buy an asset and raise its price, usually with fake news, only to sell it when the price starts to rise. GlobeNewswire removed the press release minutes after CNN contacted and issued a correction, urging investors and the media to ignore the announcement.
A spokesperson for Intrado, the service's parent company, said in an email that a "fraudulent user account" was created to issue the fake press release. The service stepped up its authentication measures and promised a full investigation into how its systems were activated.
Although the press release appeared authentic at first glance, it contained some telltale signs of fake news. It contained the bogus website "walmart-corp.com" as the email address of Walmart's chief marketing officer.
He used a partial title for Mr. McMillon
And it was the first and only press release Walmart issued on GlobeNewswire. Litecoin was also an odd choice for Walmart. While it is among the most 'dated' cryptocurrencies in the market, it is outside the top 10 of the largest digital currencies and is generally not among the most traded, although that changed yesterday when Litecoin's several billion dollars passed. out of hand, according to the Coinbase online trading platform.
Pump and dump schemes are typically reserved for less regulated markets, such as penny stocks and cryptocurrencies, where regulators and investors have less information about the markets and less ability to detect criminal activity.
While unusual, the fake press release from a company the size of Walmart wasn't the first of its kind. It's been turbulent months for cryptocurrencies, which have grown in recent years. Bitcoin, which has reached a new one quotation maximum in April, plummeted to around $ 30 in June after China stepped up its crackdown on digital currencies.
Regulatory concerns have also increased regarding digital currencies
The US Senate added a provision to its $ 1,63 trillion infrastructure bill passed last month that imposes more federal regulation on cryptocurrencies and could expand the number of cryptocurrency users who should report documents to the Internal. Revenue Service. The bill now needs to be passed by the House before it can be presented at President Joe Biden's desk.