Hoax about Walmart and Litecoin makes cryptocurrency prices rise
A news release published Monday morning claiming that Walmart would begin accepting payments in Litecoin, a digital currency, drove up its price by 30 percent before the retail giant said that the announcement was fake.
The release, which appeared to come from Walmart itself, was published on Globe Newswire, a communication service whose parent company, Intrado, is owned by private equity firm Apollo Global Management. The release landed just as trading began in the U.S. stock market and was quickly picked up by several big news outlets, including Reuters and Bloomberg. The price of Litecoin and other cryptocurrencies, such as Bitcoin, jumped on exchanges like Coinbase.
Walmart soon issued a statement saying that the Litecoin announcement was not true and that it had not authorized its publication.
“We are digging into it further to understand what happened,” said Randy Hargrove, a Walmart spokesman.
It was not clear who was behind the fake release, which had enough of the hallmarks of a corporate release to appear authentic but which listed a contact email address at the unauthorized website walmartcorp.com,
and how it made it past Globe Newswire’s systems. But it was hardly the first hoax of its kind. In 2010, another news wire service published a fake release saying cereal company General Mills was the subject of a federal investigation.
In 2009, federal securities regulators charged a broker with disseminating false releases to manipulate the shares of several public companies. In that case, the Securities and Exchange Commission moved swiftly and filed an enforcement action just three weeks after the scheme began.
Securities lawyers said regulators would likely
open an investigation because the hoax involved a publicly traded company, and it did not matter if the biggest surge in price was in a largely unregulated digital currency.
“It is a misrepresentation involving a public issuer,” said Andrew Calamari, a lawyer with Finn Dixon & Herling and a former director of the SEC’S securities and New York office.
Federal prosecutors also have broad jurisdiction to investigate market hoaxes of this kind under the wire fraud statute.
Representatives for the SEC and Globe Newswire were not immediately available for comment.
Walmart learned of the
release only after it started receiving calls from reporters seeking to confirm accounts from some news outlets that had published information based on the release, Hargrove said. He noted that Walmart typically uses Businesswire, a rival communication service, for its announcements and that the press contact named in the release does not work in Walmart’s media division.
The news was also briefly posted by the @Litecoin Twitter account. The Litecoin Foundation, which supports the currency’s development, later posted that it had not entered into a partnership with Walmart.