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.

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