Walmart has denied sending out a fake press release that claimed the retail giant would begin accepting Litecoin as payment, raising questions about a possible “massively successful” pump-and-dump scheme.
Several news outlets including CNBC published and then retracted the fake statement, which temporarily moved markets and sent the price of Litecoin soaring as much as 20 percent, along with other cryptocurrencies, before prices fell back down to earth.
The fake press release was sent out by GlobeNewswire, according to Walmart spokesman Randy Hargrove. He said Walmart was in communication with the newswire company to investigate how the false press release got posted.
A pump-and-dump scheme is a type of securities fraud that involves artificially inflating (“pumping”) the price of a security through false, misleading, or exaggerated statements regarding the security’s price. The person perpetrating the fraud can profit from the price inflation by quickly selling (dumping) the securities at a high price, according to Corporate Finance Institute (CFI), a financial analyst certification organization that provides online training and education.
“In a pump-and-dump scheme, fraudsters may use various tools, including cold calling, email spam, and fake news releases,” CFI reported.
An hour after the announcement came out, Litecoin’s price fell from more than $220 back to $178 — about where it was trading before the fake press release went out, CNN reported. Walmart share prices saw little movement. Litecoin shares were trading down 1.17 percent in the last 24 hours, according to Messario.
A verified Twitter account for Litecoin deleted a tweet linking to the press release after it became apparent that the news was fake, said to Charlie Lee, creator of Litecoin and managing director of the Litecoin Foundation. “It’s an unfortunate situation — we obviously shouldn’t have tweeted the news,” Lee said in a phone interview with Bloomberg.
Walmart typically uses Business Wire to distribute releases, The Verge reported. The press release posted to GlobeNewswire linked to a non-functioning website, and there was no evidence of a Securities and Exchange Commission filing, which would have been expected since Walmart is publicly traded.
Although the press release appeared real, it had telltale signs of fake news, CNN reported. It used the bogus “walmart-corp.com” website as the email address for Walmart’s chief marketing officer. It was also the first and only press release Walmart had sent out on GlobeNewswire.
And Litecoin would have been a strange choice for Walmart. It’s one of the oldest cryptocurrencies on the market but not one of the most actively traded (it ranks No. 15 on Coinmarketcap). That changed for a minute on Monday when billions of dollars of Litecoin changed hands, according to online trading platform Coinbase.
“Kinda wild to think that that press release would have been more believable if it had said Dogecoin,” tweeted Joe Weisenthal @TheStalwart, Co-host of the Odd Lots podcast.
It’s not clear who is responsible for the hoax press release, but Walmart confirmed that it is fake.
Psychologists offer a few evidence-based strategies for defending against the attraction of fake news, according to Mark Whitmore, Ph.D., assistant professor of management and information systems at Kent State University’s College of Business Administration.
During an American Psychological Association presentation, Whitmore recommended that people should work on keeping an open mind by deliberately exposing themselves to different points of view. Drawing on multiple different perspectives can help us moderate our viewpoints and make them less extreme, he said.
Also key to defending against fake news is critical thinking. People must learn to question what they are told and this should begin in childhood, Whitmore said.
News outlets can be particularly susceptible to being hoaxed.
“I love that not one person in any of these newsrooms asked themselves why would one of the largest retailers in the world accept payments in currencies that fluctuate 25% on an average week then choose a second tier one at that?” tweeted Dare Obasanjo @Carnage4Life. A program manager at Microsoft, Obasanjo shares opinions about product management, tech news and inclusivity in tech.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?