The world of cryptocurrency, built on the promise of decentralization and trust, is increasingly mired in fraud and misinformation. It's no longer just celebrity endorsements that can trigger drastic price swings—even unverified rumors can cause massive market volatility. Litecoin (LTC) recently experienced this firsthand.
On September 13, a press release distributed via GlobeNewswire—a service owned by Intrado, a subsidiary of Apollo Global Management—claimed that Walmart would begin accepting Litecoin for online payments. The news was quickly picked up by major financial outlets like Bloomberg, Reuters, and CNBC, sparking a frenzy in the crypto markets. Litecoin’s price surged over 37% to $236, while Bitcoin briefly dipped below $44,000.
But the celebration was short-lived. Within minutes, the Litecoin Foundation’s official social media account deleted its post sharing the news. GlobeNewswire issued a statement urging readers and journalists to disregard the release, and Walmart clarified that it had no relationship with Litecoin. Within 30 minutes of the denial, Litecoin plummeted by over 30%, falling below $180.
This incident is not an isolated case. Fake news and fraud continue to disrupt cryptocurrency markets. According to the U.S. Federal Trade Commission (FTC), nearly 26,500 crypto-related scams were reported in 2020, resulting in losses of $419 million. This year’s losses are expected to exceed that figure. In such an environment, comprehensive regulation seems inevitable. On September 14, SEC Chairman Gary Gensler stated during a hearing that his agency is collaborating with the Federal Reserve and others to clarify regulatory frameworks and protect investors.
The Litecoin Rollercoaster
The Litecoin saga began with a press release on GlobeNewswire. On September 13, the distributor published a release claiming that Walmart—the world’s largest retailer—had partnered with Litecoin and would begin accepting it as a payment method starting in October.
Although Walmart’s official website and social media channels did not confirm the news, the Litecoin Foundation’s initial post amplified the rumor. Mainstream media outlets further spread the unverified claim, pushing Litecoin’s price up by 32.8% to $235.88.
Walmart quickly denied the report, calling it false and stating that it was investigating the source of the misinformation. "Walmart is unaware of the press release issued by GlobeNewswire and has no relationship with Litecoin," a spokesperson said. The Litecoin Foundation deleted its post, and founder Charlie Lee later described the incident as a mistake caused by overexcitement.
The gains evaporated in less than 30 minutes. Litecoin gave up all its gains and fell below $180. Data from Bitcoin Home indicated that over $216 million in Bitcoin positions and $21.65 million in Litecoin positions were liquidated within 24 hours. More than 100,000 traders faced liquidations during this period.
GlobeNewswire pledged to work with authorities to investigate the incident, while Lee denied any involvement by the Litecoin Foundation. He also noted that he owns only about 20 Litecoins, implying he had no motive to pump the currency’s value.
According to CoinMarketCap, Litecoin ranks as the 19th most valuable cryptocurrency. Lee claims that despite being less popular than Bitcoin, Litecoin is widely used for payments. "An estimated $3 billion worth of Litecoin is sent daily, mostly for transactions," he said. "Over its 10-year history, more than $1 trillion worth of value has been transferred via the Litecoin network."
Given the prevalence of fake news in financial markets—and recent corporate moves toward crypto—the Walmart rumor gained surprising traction.
In August, Walmart posted a job opening for a "Digital Currency and Cryptocurrency Product Lead" to develop the company’s digital currency strategy. The role required experience in cryptocurrency ecosystems and technology, sparking speculation about the company’s plans.
Similarly, in July, Amazon posted a job for a "Digital Currency and Blockchain Expert" to join its payments team. The listing mentioned developing Amazon’s "digital currency and blockchain strategy," leading to rumors that the company might accept cryptocurrencies. Bitcoin’s price jumped 14.5% to $40,501.70 on July 26—a high since mid-June—before Amazon clarified that it was merely exploring the space.
Beyond Litecoin: A Pattern of Misinformation
The cryptocurrency media landscape is relatively niche, with news often circulating within closed ecosystems like CoinDesk and NewsBTC. This creates an environment where information can be echoed and amplified without sufficient verification.
Intrado, which manages GlobeNewswire, called the incident unprecedented and promised to enhance authentication steps to prevent future occurrences.
Crypto investors have mixed feelings about such events. "On one hand, fake news can drive prices up, allowing quick profits," one trader noted. "On the other, many investors get trapped and suffer significant losses."
As mainstream institutions show growing interest in crypto, expectations are rising that digital assets will become widely accepted payment methods. This optimism, however, also invites more scams and false reports. "With equities under pressure in some sectors, attention on cryptocurrencies has surged—along with speculation," said an individual trader. "We’ve grown accustomed to prices swinging wildly on rumors or guesses."
She added that retail investors, who often lack the resources to verify information or hedge risks, are particularly vulnerable. "Unlike stocks, many crypto transactions are untraceable, participants are anonymous, and funds may be sent to private accounts rather than exchanged on open markets."
Wang Haifeng, a senior researcher at OKG Research, noted that the crypto market has been relatively sluggish lately, with traders waiting for clear signals. The Walmart rumor, amplified by major media outlets and the Litecoin Foundation’s actions, triggered a sharp but short-lived emotional reaction.
"Incidents like this aren’t unique to crypto," Wang said. "Stocks and commodities also experience fake news and market manipulations. But as crypto assets grow, media exposure increases, yet the market remains like the ‘Wild West’ in many ways. We need to be more discerning and rational about the information we receive."
Despite similar issues in regulated markets like equities, the extreme volatility of cryptocurrencies makes comprehensive regulation increasingly likely.
John Wu, President of Ava Labs and a former venture capitalist, noted that fake announcements are nothing new. "But the audacity of this scheme shows that old tricks aren’t working as well anymore. The crypto industry needs to hold itself to a higher standard."
"Unfortunately, this incident will deter skeptics and reinforce narratives about volatility and instability," Wu wrote. "Thankfully, it may set us back only weeks or months—not years."
The Push for Tighter Regulation
According to the FTC, cryptocurrency-related investment fraud hit record levels in 2021 after causing $419 million in losses in 2020. In the first quarter of 2021 alone, the FTC received 14,079 fraud reports with losses totaling $215 million.
A survey by Motley Fool found that cryptocurrency is now the preferred method for investment scams. "Wire transfers used to be the most common payment method, but the ease of moving funds via crypto and its growing popularity as an investment tool have made it the go-to for fraudsters."
The Walmart-Litecoin incident is likely to accelerate regulatory efforts. During a Senate hearing on September 14, SEC Chair Gary Gensler stated that he has directed the agency to collaborate with other regulators and Congress to enhance investor protections in areas including crypto offerings, trading platforms, stablecoins, and asset custody.
"Currently, most of the crypto space operates outside regulatory frameworks designed to protect investors, prevent illicit activity, and ensure financial stability," Gensler explained. "This asset class is rife with fraud and abuse in certain applications." The SEC is working with the CFTC, the Federal Reserve, the Treasury Department, and the OCC to clarify jurisdictions and safeguard investors.
On August 5, Gensler sought support from Senator Elizabeth Warren, arguing that lawmakers should grant regulators clear authority to oversee exchanges—including decentralized finance (DeFi) platforms.
Wang Haifeng pointed out that compared to traditional markets, crypto assets are still in their early stages in terms of history and scale. The lack of regulation and transparency has long been a pain point hindering industry growth. "This year, global regulatory efforts have accelerated. Governments in India and Japan are moving to tax and oversee crypto assets and NFTs. While these measures may cause short-term pain, they will improve compliance and lay the foundation for future development."
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Frequently Asked Questions
What caused the Litecoin price surge on September 13?
A fake press release claimed Walmart would accept Litecoin payments. The news was amplified by major media outlets and social media, triggering a brief but sharp price increase.
How did the market react after the rumor was debunked?
Litecoin’s price fell over 30% within 30 minutes, erasing all gains. Thousands of traders faced liquidations, and confidence in crypto news sources was shaken.
Are cryptocurrency scams common?
Yes. The FTC reported nearly 26,500 crypto-related scams in 2020, with losses exceeding $419 million. 2021 is on track to surpass those figures.
What is being done to regulate cryptocurrencies?
Regulators like the SEC and CFTC are collaborating to establish clearer rules for crypto offerings, exchanges, stablecoins, and custody solutions. Legislative efforts are also underway.
How can investors protect themselves from crypto fraud?
Verify news through multiple reliable sources, avoid making impulsive trades based on rumors, and use well-established platforms with robust security measures.
Will increased regulation harm the crypto market?
While regulation may cause short-term volatility, it is expected to improve transparency, protect investors, and foster long-term growth by reducing fraud and instability.