Fake news release reveals market ‘pump and dump’ scheme

A news release issued Monday, upon the U.S. stock market opening claimed to be from Walmart and said that the nation’s largest retailer would begin accepting payment in Litecoin, a digital currency.

Several media outlets wrote it up thinking it was real. the twitter account for the Litecoin Foundation, which promotes the use of the currency, quoted the release in a post. As a result, the value of Litecoin jumped more than 30 percent before Walmart put out a statement saying the news was false.

The newest thing in finance had apparently fallen prey to one of the oldest investor hoaxes around — a classic pump-and-dump scheme. Someone issued a false news release, likely taking advantage of the general hoopla around cryptocurrency to stoke enthusiasm for Litecoin, which is far less popular than Bitcoin and other digital currencies. Litecoin’s price spiked to $230  right after the news, then fell to around $180 after Walmart refuted the release. Although the SEC his not commented, some project the agency is investigating who benefitted from the false news release and may seek charges.

JEFFREY NEWMAN REPRESENTS WHISTLEBLOWERS INCLUDING SEC WHISTLEBLOWERS. HE CAN BE REACHED AT 617-823-3217 or JNewman@NewmanShapiro.com