False Press Release May Justify Further Scrutiny Of The Crypto Space

September 14, 2021 03:30 PM
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day

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Results in the Top 10 were mixed ahead of SEC Chairman Gary Gensler's testimony before the Senate at 10 a.m. ET, where crypto will be a topic. Polkadot (DOT) is outperforming and is up 7%.

Crypto Story of the Day

Yesterday, a fraudulent press release announced that Walmart had partnered with Litecoin (LTC) to begin accepting payment in the crypto. LTC rose by as much as 39% on the news before paring losses in the aftermath.

At around 9:30 a.m. ET, a false press release was released by GlobeNewswire stating that Walmart had formed a partnership with Litecoin Foundation, an organization promoting LTC’s adoption. The false press release featured a quote from LTC creator and Litecoin Foundation Managing Director Charlie Lee and wasn’t featured in Walmart's official press site. 

A number of traditional news outlets, notably CNBC and Reuters, reported the fraudulent news. A Twitter account controlled by the Litecoin Foundation with over 762,000 followers tweeted “Walmart Announces Major Partnership With Litecoin (LTC)” following the release of the false press release. The tweet was later deleted. 

According to Lee, “[t]he [Twitter account], we have three people who control that and one of the people this morning, before I woke up, saw the GlobalNewswire [press release] and saw Yahoo News posting it and CNBC posting it and he thought it was true because he didn’t know better… Pretty soon after that he realized he had made a mistake, that it was fake and he deleted it.”

Walmart and GlobeNewswire said they’re investigating the incident, “including [looking] into any criminal activity associated with this matter.” 

The incident comes at a moment when U.S. regulators, in particular SEC Chairman Gary Gensler, have been signaling a greater focus on enforcing existing financial rules in the crypto space. For example, in previously released prepared remarks for today’s hearing, Gensler wrote that currently “large parts of the field of crypto are sitting astride of… regulatory frameworks that protect investors and consumers, guard against illicit activity, and ensure for financial stability.”

In a May statement on BTC investment funds, the SEC warned that “investors should consider the volatility of [BTC] and the [BTC] futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying [BTC] market.” The price of BTC also jumped by about USD 2,000 following the fraudulent news. 

For now, the exact motivation of the individual(s) behind the fake Walmart press release is unknown. Often, examples of crypto hacks and fraud have proven to be less sophisticated and thought out after details emerge, such as the Poly Network hack or Twitter hack. Gensler has highlighted “fraud” and “scams” to call for greater investor protection in the crypto space, while the SEC has as recently as May made allegations of “potential” manipulation in BTC markets. 

Regardless of the exact details, this episode will likely, in regulators’ eyes, further justify the scrutiny and reserve directed at the crypto market.

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