The fake news earlier this week, which took Litecoin to the stars and back to the ground in a matter of hours, could turn out to be more serious than it seems because – unlike in the crypto verse – the stock market is down to the millimeter.
According to Reuters, Walmart Inc opened an investigation into a fake news distributed through the Globe Newswire press release distributor claiming the company had partnered with the Litecoin Foundation to accept the cryptocurrency.
In addition to actions taken by Walmart Inc, Globe told NewsWire in an email that it would work with appropriate authorities to investigate the case.
“We will work with the appropriate authorities to request and facilitate a full investigation, including any criminal activity related to this matter.”
Jail money and millionaire money
It is very common in the world of Crypto Twitter for prices to move in time with the rumors without further investigation. That’s the nature of markets, and traders take advantage of this lack of regulation to orchestrate schemes of manipulation that range from fake advertisements to massive coordinated pump-and-dump operations.
But when someone does such a stunt to potentially influence the stock market, things change dramatically. And this is important because Walmart Inc. is a publicly traded company and a potential partnership could affect the fundamentals or risk of the company.
On the face of it, the “troll’s” actions were aimed at propelling LTC’s price, but it is possible to prove that they may have affected Walmart’s stock prices as well.
Under the Securities Act of 1933 and the Securities Exchange Act of 1934, an individual is involved in securities fraud if they intentionally engage in fraudulent practices designed to manipulate financial markets or induce investors to make financial investment decisions based on misleading or false information . FindLaw defines securities fraud as follows:
In general, securities fraud occurs when someone makes false statements about a company or the value of its stock and others make financial decisions based on the incorrect information.
Third party misrepresentation is a type of securities fraud and occurs when a third party reveals false information about the stock market or a specific company or industry. Federal securities fraud convictions can result in a 5-year federal prison sentence per offense and fines of up to $ 5 million.
The Litecoin-Walmart fake partnership
According to the official versions, one person posed as a Walmart employee and passed the note on to Globe Newswire for reproduction. After the news spread, Globe Newswire quickly issued a statement to ignore the press release.
Globe NewsWire Statement. Source Globe NewsWire
The news had little impact on Walmart’s stocks. However, Litecoin (LTC) rose abruptly, only to crash at the same intensity. Someone made a lot of money doing it and done significant damage to investors. Walmart’s shares also fell slightly. In the graphic below, Litecoin (LTC) is shown with hollow candlesticks and Walmart (WMT) with traditional candlesticks.
Performance comparison between Litcoin and Walmart before, during and after the fake news. Image: trade view
So far, neither Walmart nor Global Newswire have announced what action they would take; However, the championship blow could be costly for whoever made it – if caught.
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