Walmart Inc. and a news release distributor are investigating a scam linking the company to a phoney cryptocurrency deal following an announcement, later proved to be fraudulent, that triggered a brief increase in Litecoin via an unregulated market.

Walmart will begin accepting Litecoin payments at 9:30 a.m. in New York, according to a GlobeNewswire announcement. Litecoin is a relatively unknown instrument that is not among the top ten cryptocurrencies, according to CoinMarketCap.com. The comment was initially covered by Reuters, CNBC, and Bloomberg News, causing Litecoin to surge by as much as 33%. Within an hour, the merchant refuted the assertion, wiping out the most of the gain and driving the entire bitcoin market into a frenzy. Additionally, Litecoin later admitted the announcement was a hoax.

According to the company and newswire, they are now investigating how the incidents unfolded. Tracking down the attacker may prove tough in the secretive realm of cryptocurrency transactions, and the incident may well encourage critics who warn that without regulation, digital currencies are vulnerable to manipulation by unscrupulous players.

GlobeNewswire is cooperating with authorities on an investigation, "including any illegal activities related to this situation," according to an emailed statement from Intrado, the newswire's owner.

Immediately following the appearance of the bogus announcement, a tweet from Litecoin's verified account linked to the release, lending legitimacy to the news. That tweet was removed after it was revealed that the announcement was a forgery, according to Charlie Lee, the creator of Litecoin and managing director of the Litecoin Foundation.

Lee stated in an interview with Emily Chang on Bloomberg TV that he only owns roughly 20 Litecoin tokens and has no motive to participate in schemes that could boost the digital currency's value.

“It's quite unfortunate that this happened, and we need to look into it immediately,” Lee said, adding that his foundation "seriously fouled up" by tweeting about the release. He stated that he only has limited resources to investigate what occurred and that GlobeNewswire should conduct its own investigation.

The incident demonstrates how bogus statements continue to pose a significant risk to newswire operators that distribute the releases that determine the daily flow of financial markets in the United States.

“If you issue a news release with the ability to impact markets, you run the risk of causing significant harm,” said Kathleen Culver, director of the University of Wisconsin's Center for Journalism Ethics. “If you were someone who saw this, made some purchases, and then everything came crashing down, you could be out a substantial sum of money.”

While false releases are not novel to the industry, it would appear that cryptocurrency provide fertile ground for deception. In comparison to equities, trading is usually untraceable, which means that scammers leave few traces. And traders have grown to expect exaggerated market reactions to the most tenuous of announcements — such as when Elon Musk mentions a project on Twitter.

“We recognise the impact of a single tweet in today's world,” Lee explained. “It was a case of over-excitement at the news. This occurs.”

'ABSENCE OF RELATIONSHIP'

Walmart announced in a statement that it has "no association" with Litecoin, after a spokeswoman told Bloomberg News that the business is investigating the erroneous news release. In a tweet, the Litecoin Foundation clarified that it had not entered into a relationship with Walmart.

Litecoin increased by 2% to $4.14 in New York at 4:14 p.m. Walmart shares fell less than 1% to US$145.06 at Monday's close, after trading in positive territory earlier in the day.

Of course, cryptocurrency is not the only market in which incorrect information has impacted pricing. In recent years, the SEC has pursued individuals for issuing bogus press releases. The agency frequently relies on well-timed stock moves to deduce who is behind the hoax, but unravelling this one may be more difficult, given Bitcoin is supposed to be anonymous. The SEC, which declined to comment, currently has limited access to data on well-timed cryptocurrency trades and will likely have to rely on unregulated platforms for additional information.

“Even highly regulated marketplaces, such as the stock market, may be manipulated in this manner,” said Jeffrey Timmermans, an Arizona State University business journalism professor. “Because the crypto market is so unpredictable, it attracts a large number of individual investors, who are likewise prone to invest in rumour and speculation.”

It is unknown whether the incident would deter large corporations from cooperating with cryptocurrencies in the future. Their use has exploded in recent years, with El Salvador even recognising Bitcoin as legal cash, but concerns about their susceptibility to manipulation and pump-and-dump scams have spurred distrust in many segments of the market.

However, businesses are bracing for increased integration. Walmart offered a position earlier this year to establish a "digital currency strategy and product roadmap" as well as identify "crypto-related investment and collaborations," according to an August job posting on the company's website.

“In terms of this being detrimental to crypto, this occurs in the traditional stock market as well,” Litecoin's Lee explained. “It occurs much more frequently in the traditional stock market than in crypto. However, I've saw it occur a couple times with cryptocurrency.”

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