Walmart, Globenewswire investigate fake statements on crypto deal

According to a 9:30 a.m. release on Globenewswire in New York, Walmart will begin paying its customers with Litecoin, a relatively obscure tool that isn’t among the top 10 cryptocurrencies, according to CoinMarketCap.com. The statement was initially covered by Reuters, CNBC and Bloomberg News, leading to a 33% jump for Litecoin. Within an hour, the retailer denied the statement, eroding most of the gains and sending a shiver through the broader cryptocurrency market. Litecoin also later confirmed that the announcement was false.

The company and Newswire say they are now trying to determine how the incidents happened. Tracking down criminals can prove difficult in the shady world of crypto transactions, and this episode may well reinforce critics who argue that without regulation, digital currencies are susceptible to interference from unscrupulous actors. .

Globenewswire is working with authorities on an investigation, “including any criminal activity linked to this case,” according to an emailed statement from Intrado, which operates Newswire.

“This has never happened before and we have already taken advanced authentication steps to prevent this isolated incident in the future,” Intrado said. Intrado, controlled by Apollo Global Management, distributes 200,000 press releases per year. its website.

Adding credibility to the news right after the appearance of the fake statement was a Twitter posting from Litecoin’s verified account, which was linked to the release. Charlie Lee, the creator of Litecoin and managing director of the Litecoin Foundation, said that the tweet was deleted after the announcement was fake.

In an interview on Bloomberg TV with Emily Chang, Lee stated that he only has 20 Litecoin tokens and does not have incentives to participate in schemes that could pump up the value of the digital currency.

“It’s really bad for this to happen, and we really need to look into this,” Lee said, tweeting about the release that his foundation “turned really bad”. He said he had limited resources to see what happened and added that GlobeNewswire should investigate the incident.

The incident shows how fake statements pose a serious risk to newswire operators who exclude releases that guide the daily flow of US financial markets.

“If you’re making a press release that can move the markets, you have a tremendous potential for loss,” said Kathleen Culver, head of the Journalism Ethics Center at the University of Wisconsin. “If you were the person to see this, made something buys and then everything falls to earth again, you could shell out a lot of money.”

Although fabricated releases are not new to the market, cryptocurrencies appear to provide fertile ground for fraud. Unlike stocks, trading is mostly untraceable, so scammers tend to leave some track. And traders have been conditioned to expect the most blatant price reactions to announcements—when, say, Elon Musk names a project on Twitter.

Lee said, “We realize how powerful a tweet can be in this day and age. It was an exuberance about news. It happens.”

‘no relation’

Walmart said in a statement that the company is trying to learn more about the false news release, a representative told Bloomberg News. The Litecoin Foundation said in a tweet that it has not entered into a partnership with Walmart.

Litecoin is up 2% at 4:14 p.m. in New York. Walmart shares fell less than 1% to $145.06 at Monday’s close after trading earlier in positive territory.

Cryptocurrency isn’t the only market in which bad information has moved prices, of course. The SEC has gone after individuals for issuing fake press releases in recent years. The agency often relies on well-rounded stock trades for clues about who is behind the fraud, but uncovering this fraud can be difficult, as cryptocurrencies are designed to be anonymous. The SEC, which declined to comment, may well have limited access to data on crypto trades and may have to turn to unregulated platforms for more information.

“Even highly regulated markets like the stock market can be manipulated in this way,” said Jeffrey Timmerman, a business journalism professor at Arizona State University. “The crypto market is so volatile, there is huge retail investor participation, and these are the people who are also likely to jump on rumor and speculation.”

It is not clear whether this episode will prevent large companies from partnering with cryptocurrencies in the future. Their use has skyrocketed in recent years, with El Salvador even going so far as to adopt bitcoin as legal tender, but questions about their susceptibility to arbitrage and pump-and-dump schemes has raised doubts in many corners of the market.

However, companies are preparing for another integration. Walmart advertised a position earlier this year to develop a “digital currency strategy and product roadmap,” identifying “crypto-related investments and partnerships,” according to an August job posting on the company’s website.

“In terms of it being harmful to crypto – it happens to the regular stock market as well,” Litecoin’s Lee said. “It happens a lot more with the regular stock market than with crypto. But I’ve seen it a few times with crypto.”