Media outlets fall for Litecoin scam

On Monday 13th September, the GlobeNewswire service posted a press release purporting to be from Walmart Inc. It claimed that the famous retailer would be accepting payments in Litecoin. It was picked up by the other major wire agencies, including Reuters. It was taken as being true.

As a result, the price of Litecoin soared by 30%, from $175 to a peak of $233.44, in 15 minutes. Litecoin holders were no doubt ecstatic, and many people on hearing the news started buying Litecoin.

The buzz didn’t last long though: somewhere around 45 minutes, according to Coindesk, and then Litecoin plummeted back to $180. Why? A few eagle-eyed readers spotted discrepancies in the press release. And then Walmart released a very brief statement confirming the news was fake.

It was a clever ruse by the scammer. It is likely that as Litecoin’s price surged, the individual behind the false press release sold off a substantial amount of Litecoin as it reached its top price. Meanwhile traders who saw it as an opportunity to buy, lost a lot of their investment in what was basically a pump-and-dump scam.

According to Coindesk’s investigation into how this happened, there were “ at least two key failures.” The first was made by GlobeNewswire, which published the fake release. Should questions not have been asked about whether it really was from Walmart, which must have a massive PR machine at its disposal? The fact is that GlobeNewswire is such a highly trusted service that not even the Associated Press would query what it sends out.

The second mistake was made, rather alarmingly, by the Litecoin Foundation, which retweeted the news, even though it contained what we now know were fake quotes from Litecoin Foundation leadership. Even Coindesk admits that there was “a breakdown in our internal processes, and we are adding further safeguards against getting taken in again.”

It’s so easy to share, or retweet, anything based on a headline, when we should all read the content of the news we are helping to spread. And our junk mail boxes show us on a daily basis how many scammers attempt to impersonate big brands. Innocent people who don’t understand this are regularly tricked into losing significant sums. This was a different kind of scam, but it still ended up with those who bought the news being the losers.

Why is Litecoin Doing so Well?

Today Litecoin is up 62% on the month, 24% on the week and a solid 200% on the year. Its price has dipped a tiny 2% at the time of writing, but it is still possible to say that Litecoin has been doing remarkably well during this latest surge in the crypto markets.

Litecoin began 2019 at around $30, representing a dramatic plunge in price during 2018. As ever, people are looking for explanations for this reversal of fortune. Billy Bambrough, writing at Forbes believes that it may in part be due to the upcoming halvening of bitcoin, which will happen in May next year. Halvenings always seem to trigger a price surge. The bitcoin event will result in he number of bitcoins awarded to miners for mining new bitcoin blocks will drop from 12.5 bitcoin to 6.25 bitcoin. “We are going to hoard bitcoin at this point in time,” Brian Kelly, a bitcoin and cryptocurrency fund manager told CNBC. “We’re not going to sell it. You generally have a rally a year into [a bitcoin halvening], and a year out of it. And so we’re just at the beginning of that stage […] a supply cut is generally bullish.”

A halving and more use of litecoin

Litecoin is due to halve its miner rewards in August of this year, and if the economic theory applied to bitcoin’s supply reduction due to the halvening are correct, it will also apply to litecoin, which will see its mining reward fall from 25 litecoin to 12.5 litecoin.

What has happened during previous bitcoin halvenings, which are fixed events that occur after every 210,000 blocks have been mined. For example, about one year after the first bitcoin halving event in November 2012, the bitcoin price reached what was then an all-time high of $1,000. And the 2016 halvening appeared to precipitate the bull run of 2017 when bitcoin touched almost $20,000.

But it isn’t just Litecoin’s upcoming halvening that has boosted its price. Over the last few months litecoin has gone through some technical improvements and it is being spent via Coinbase Visa cards at millions of locations worldwide. Coinbase users can choose which cryptocurrency is used on the card through a new app that supports all crypto assets available to buy and sell on the Coinbase platform. The app also offers instant receipts, transaction summaries, and spending categories, to help people keep track of their spending.

Litecoin has been seen as one of the most credible rivals to bitcoin for some time; perhaps this is the year when it finally asserts itself as a serious contender in the crypto market.