A Walmart press release announcing a "major partnership" with litecoin sent the cryptocurrency soaring early Monday, before it quickly plunged again after the report was exposed as fake news.
Litecoin's value soared more than 30% — to about $231 — on news that Walmart would begin allowing customers to make payments with the coin, before falling more than 20% an hour later as news that the report was fake began to spread, according to CoinMarketCap. The confusion over the press release initially led to speculation that the news could be accurate, just inadvertently published ahead of schedule — a theory bolstered by Litecoin tweeting the news and later deleting it — but a Walmart spokesman told news outlets that the announcement was entirely fraudulent. (Litecoin could not immediately be reached for comment.)
The controversy also sparked worries of a pump-and-dump scheme that's likely to draw even more negative scrutiny from federal regulators. This has become a growing concern in the crypto industry amid strong signals from the SEC, led by new Chairman Gary Gensler, that the agency will look more closely into cryptocurrency trading.
What happened "will definitely feed into the narrative that crypto needs intense regulation," Silicon Valley investor Robert Siegel, a management lecturer at the Stanford Graduate School of Business, told Protocol. "Crypto is volatile right now because it is ALL speculation. When assets fluctuate this much, it is not about underlying changes in assets or these assets being used as actual currency. During times of speculation, market manipulation is always likely/possible."
Christine Parlour, a UC Berkeley Haas School of Business professor, said the announcement was "clearly fishy." "Events like these clearly will make regulators pay more attention to what is happening in crypto," she told Protocol. "That is not necessarily a bad thing."