The trust-based Cryptocurrencies are now plagued by fraud and lies. It is not new that a celebrity can lead the rise and fall with a single word, and even an unverified event can drive a huge market volatility. Litecoin (LTC) has experienced this recently.
On September 13, U.S. Eastern time, a news from GlobeNewsire, a press release distributor under Intrado under Apollo Global Management, that "Walmart Announces Support for Online Payments with Litecoin" was forwarded by Bloomberg, Reuters, CNBC and other media and detonated the cryptocurrency market. Litecoin rose more than 37% to US$236. Affected by it, Bitcoin once fell below US$44,000.
Of course there is a reversal. After a few minutes, the official social media account of the Litecoin Foundation, which reposted this news, quickly deleted the tweet. GlobeNewsire issued a statement stating that reporters and other readers would ignore the press release, and Walmart also came forward to clarify its relationship. Litecoin has nothing to do with it. Within 30 minutes of "refuting the rumors," Litecoin gave up more than 30% of its gains and fell below $180.
This is not just an oolong moment exclusive to Litecoin. Fake news and fraud have been disrupting the cryptocurrency market. According to US Federal Trade Commission (FTC) survey data, nearly 26,500 crypto fraud cases were reported in the country in 2020, with a total loss of 419 million U.S. dollars, and this year's loss will exceed this value. Under such an ecological environment, comprehensive supervision may only be a matter of time. On September 14, local time, the chairman of the US Securities and Exchange Commission (SEC), Gary Gensle, stated in the hearing that he is cooperating with other institutions such as the Federal Reserve to clarify the regulation of the encryption field to protect investors.
The Litecoin moment
The news distribution platform GlobeNewswire is the fuse for Litecoin's oolong wave. On September 13, local time, GlobeNewswire issued a press release stating that Walmart, the world's largest retailer, has reached a partnership with Litecoin and will include Litecoin as its payment method from October.
Although Wal-Mart’s official website did not have any relevant official statement, and its official social accounts did not repost the news. After the news was published on Litecoin’s official social media, the “good” effect was repeatedly amplified after being reposted by mainstream media without confirmation. , Litecoin rose 32.8% to 235.88 US dollars per coin.
Wal-Mart urgently refuted the rumors, saying that its cooperation with Litecoin was purely false news and was investigating the process of distributing false news. "Walmart knows nothing about the press release issued by GlobeNewswire. Walmart has nothing to do with Litecoin. If you have any questions, please consult GlobeNewswire." The Wright Foundation also deleted relevant content previously forwarded. The founder, Charlie Lee, is accepting Peng In an interview, Bo described it as a staff "error caused by over-excitement."
The rally remained for less than half an hour. Within 30 minutes of "refuting the rumors," Litecoin gave up its gains sharply and fell below $180 per coin. According to data from Bitcoin Homes, within 24 hours, Bitcoin liquidated 216 million U.S. dollars and Litecoin liquidated 21,652,700 U.S. dollars. Within 24 hours, the number of people who broke out in the cryptocurrency market exceeded 100,000.
"We will cooperate with relevant authorities to conduct a full investigation," GlobeNewswire said, "Please note that reporters and other readers should ignore this press release." At the same time, Charlie Lee also claimed that fake news has nothing to do with the Wright Foundation. The Wright Foundation will do its best to prevent the spread of fake news. In response to the speculation of the outside world, he explained that he only has about 20 Litecoins and has no motivation to participate in such a plan to increase the value of cryptocurrencies.
CoinMarketCap data shows that Litecoin ranks 19th among the most valuable cryptocurrencies in the world. According to Charlie Lee, although it is not as popular as Bitcoin, Litecoin is being used in large amounts for payment. "It is estimated that approximately $3 billion worth of Litecoin is sent out every day, most of which is used for transactions. In the past 10 years of life cycle, the value of Litecoin sent through the network exceeded $1 trillion."
In the financial market flooded with fake news, it’s not surprising that Wal-Mart allows Litecoin payments to enjoy such credibility.
Wal-Mart’s official recruitment information in August stated that it is hiring digital currency and cryptocurrency product leaders, responsible for formulating digital currency strategies and product roadmaps, and is committed to product roadmaps and project implementation. This position requires candidates to have experience in the cryptocurrency ecosystem and related technologies, and more than 10 years of experience in product or project management and technology commercialization.
And on July 22, local time, Amazon released a digital currency and blockchain expert job recruitment message. According to the content, this person will join its Seattle payment team and be responsible for developing "Amazon's digital currency, blockchain strategy and product roadmap. ". Under this statement, the market began to speculate that Amazon might allow customers to use cryptocurrency. Partly affected by speculation about this possibility, the price of Bitcoin jumped to $40,501.70 on July 26, the highest level since mid-June, with an intraday increase of approximately 14.5%.
However, a week after the job posting was issued, Amazon said that although the company is interested in this area, speculation on Amazon's specific cryptocurrency plan is not true.
Not just the Litecoin moment
Due to the verticality and relative niche nature of the cryptocurrency media, the distribution of press releases is often concentrated on websites such as Coindesk and NewsBTC, and the information is thus repeatedly circulated in a limited space and self-identified and fermented.
Regarding this incident, Intrado, who manages GlobeNewswire, stated that this situation has never happened before and has now taken steps to strengthen certification to prevent similar oolong incidents from happening again in the future.
"My attitude towards this kind of fake news is somewhat contradictory," a cryptocurrency investor told reporters. On the one hand, good news can boost prices and make a lot of profits. "On the other hand, many investors have fallen into it and suffered heavy losses."
"With the influx of major mainstream institutions and people's vision that cryptocurrency will eventually be regarded as a medium of exchange, it is expected that there will be more scams or fake news in the cryptocurrency field," said an individual cryptocurrency trader. "In particular, when the stock market is partially under pressure, attention to cryptocurrencies has skyrocketed, and speculative activities have also skyrocketed. We have become accustomed to the fact that the price of the latter has risen and fallen sharply due to a word or a guess."
She also added that for individual investors, due to their lack of information discrimination and circumvention measures, they are extremely easy to get involved in fraud cases and extremely easy to lose heavily. "Unlike stocks, most trading activities in this field cannot be tracked, cryptocurrency participants are anonymous, and many transactions are transferred to personal accounts and may not necessarily enter the market."
Wang Haifeng, a senior researcher at Ouke Yunchain Research Institute, told the 21st Century Business Herald that due to the relatively weak trend of the crypto market recently, traders and institutions are mostly waiting for the market to give a clear direction, and last night’s news was received by many overseas heads. The media release, superimposed on the Wright Foundation's actions on social media, stimulated market sentiment, triggered a chain reaction, and caused a short-term shock in the crypto market.
"In fact, not only the crypto asset industry, but also the stock and commodity markets often appear various oolong and true and false news." Exposure and attention are also increasing, but the market is still in many ways from the characteristics of the "Wild West". Because of this, we also need to have a clearer cognition and judgment of the information we receive, and remain rational.
Even in highly regulated fields such as the stock market, there is no shortage of fraud and falsehood, but due to the significant price volatility of crypto market assets, it may only be a matter of time before the authorities of various countries have more comprehensive supervision on it.
According to reports, encryption expert, former venture capitalist, and president of Ava Labs John Wu pointed out via email that fake announcements are nothing new. "But such high-profile behavior by scammers shows that the old methods are no longer working. The encryption industry needs Ask yourself more seriously."
"Unfortunately, this incident will scare away those who are skeptical of cryptocurrencies and contribute to the narrative surrounding volatility and instability," wrote John Wu, but thankfully, this will only set us back a few weeks or a few weeks. Months, not years.
More comprehensive supervision just a matter of time
According to data from the US Federal Trade Commission (FTC), after cryptocurrency fraud in 2020 caused a loss of 419 million U.S. dollars, 2021 will be a record year for investment fraud. In the first quarter of 2021, the FTC has received 14,079 fraud reports, with losses amounting to US$215 million during the same period.
Motley Fool survey shows that cryptocurrency is now the preferred method of investment fraud and fraud. "In the past, wire transfer was the most commonly used method of payment. However, the convenience of using cryptocurrency to transfer funds and the increasing popularity of cryptocurrency as an investment tool make it the main means of fraud."
Unsurprisingly, this incident will further catalyze the regulatory measures on cryptocurrencies. In a Senate hearing held on September 14, local time, Genles stated that the SEC has been asked to work with other domestic regulatory agencies in the United States and with the help of Congress to provide and sell cryptocurrency, crypto trading and lending platforms. , Stablecoins, and encrypted asset custody to strengthen the protection of investors.
"Currently, most of the crypto sector is not within the regulatory framework to protect investors, prevent illegal activities, and ensure financial stability," Genles explained, and this type of asset class is rife with fraud and abuse in some applications. The SEC is cooperating with the US Commodity Futures Commission (CFTC), as well as with the Federal Reserve (Fed), the Department of Treasury (Department of Treasury), and the Office of the Comptroller of the Currency (OCC) to clarify jurisdiction to protect investors. On August 5, local time, Genles sought the support of Senator Elizabeth Warren, saying that legislators should give regulators clear powers to set rules for exchanges, including decentralized finance (DeFi) trading venues. .
Wang Haifeng pointed out that, compared with traditional markets, the history and volume of encrypted assets are still at an early stage, and the lack of supervision and transparency has always been a pain point for the industry, hindering the development of the industry. "Since this year, the global regulation of the crypto asset industry has been put on the agenda and even accelerated. Including the recent announcement by the Indian government that it will levy taxes on crypto asset transactions, the Japanese financial regulator FSA will supervise NFT tokens. Although these regulations are possible It will cause short-term pains in the industry, but it will also further enhance the compliance of the industry, thus laying the foundation for the future development of the industry."
Source: 21jingji.com
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