This episode is sponsored by NYDIG.
At 9:30 a.m. ET, a press release from “Walmart Inc” dropped today claiming that the company was partnering with Litecoin to begin accepting the 2016-era crypto darling at its retail locations. The news, seemingly fishy, was nonetheless reported as true by nearly every crypto outlet and numerous mainstream outlets, as well. In today’s episode, NLW breaks down:
- What happened and how the news spread
- The context clues in the release that should have aroused suspicion
- The smoking guns of fakeness in the release that REALLY should have aroused suspicion
- Why the scam was designed to target press
- Why the ensuing pump is likely to draw regulatory ire.
“The Breakdown” is written, produced by and features NLW, with editing by Rob Mitchell and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Only in Time” by Abloom. Image credit: David Swanson/Bloomberg/Getty Images, modified by CoinDesk.
What’s going on guys? It is Monday, September 13 and well, this is one of the weirder mornings we’ve had in a while. I had planned to do a grab-bag style show as there was a bunch of smaller news that was interesting, if not able to carry a full show. I mean, we had a lobster NFT DAO that raised Coin Center’s biggest donation ever. We had crypto funds like Pantera raising and Bain Capital announcing a crypto fund. We have the IRS and the Treasury focusing on crypto guidance. We even have a Dune NFT controversy, of all things. Time dependent, maybe I’ll still hit some of these on the end, certainly we’ll cover them in the next few days if not.
But no, instead, we’re going to talk about Litecoin. Unreal. So, here’s the story. This morning at 9:30 a.m., a press release was sent out over third-party wire services announcing that Walmart had formed a partnership with Litecoin. Let’s read the actual release here because A), it’s been subsequently taken down, so consider this my attempt at preserving the record for posterity; and B), some of the details will be salient.
“Walmart announces major partnership with Litecoin. Source: Walmart, Inc. Bentonville, Arkansas, September 13 2021, Global News Wire, Walmart Inc., NYSE W. Mt. The number one U.S. retailer and the world’s largest grocer is pleased to announce a major partnership with Litecoin. The e-commerce giant intends to give its millions of shoppers across the world an opportunity to seamlessly make payments with cryptocurrencies, ‘the momentum and excitement around the use of cryptocurrency are undeniable, and we are poised to make online shopping easy for our customers. As a leading e-commerce store, we are committed to bringing innovations to the online shopping experience. By integrating Litecoin, we will enable shoppers to experience a very smooth checkout experience with near instant transaction confirmation and near zero fees regardless of where in the world they are. We’re very excited to be working together with the Litecoin foundation and further innovate our business. Starting October 1, all e-commerce stores will have implemented a pay with Litecoin option,’ said Doug McMillon, Walmart CEO. Walmart has long been one of the earliest adopters of blockchain technology starting as early as 2016 to trial the digital ledger for improvements in its supply chain. Now, with this partnership, Walmart will offer their shoppers to use Litecoin to benefit from the features of the cryptocurrency. Charlie Lee, Litecoin’s creator and CEO of Litecoin Foundation shared: ‘LTC’s super low fees and fast transaction times are perfect for a leading e-commerce store like Walmart. We are thrilled and extremely excited that our cryptocurrency is now supported by Walmart, opening up more opportunities for any merchants to accept Litecoin in the future. Why Litecoin? Released in 2011, Litecoin is one of the oldest digital currencies in the crypto ecosystem. Litecoin is similar to Bitcoin in that it uses the same code as the latter and shares many similarities. However, Litecoin is cheaper and faster than Bitcoin. Litecoin is also a peer-to-peer cryptocurrency that facilitates cross-border transactions and enhances digital payment systems. Like Bitcoin, Litecoin has no central authority. Litecoin was designed to be used for cheaper transactions and to be more efficient for everyday use. While Litecoin requires more sophisticated technology to mine than Bitcoin, blocks are actually generated up to four times faster. Litecoin also processes financial transactions a lot quicker.’” It then has an “About Walmart” section, a media section and a website section.
Okay, now you’ve heard the piece exactly and there were two instant reactions among crypto people. The first was something along the lines of: “Wow, that’s big institutional news. Really cool.” The second, which was a much bigger percentage of the industry was: “Wait a second. What are you talking about? Litecoin? There’s no way.” Yes, those in crypto were skeptical that one of the world’s biggest retailers would survey the landscape of available crypto payment options and choose not Bitcoin, not ether, not stablecoins, not some integrated solution that put the power of the hands of the consumer and converted to fiat on Walmart’s behalf, but instead, Litecoin. A zombie chain with virtually no development that is just hung over from 2017, forever in people’s bags. Right? I mean, the skepticism from crypto was obvious and people made that skepticism known quickly. At 9:50 a.m. Eastern Time Zone, Neeraj Agrawal from Coin Center tweeted: “Litecoin Walmart press release is fake.” He also offered three really obvious reasons why, which we’ll get into in a second. Ten minutes later, Pomp amplified that, saying: “Walmart press release on Litecoin is fake, don’t fall for nonsense.” The problem, of course, is that none of this stopped a slew of mainstream media outlets, including Reuters and CNBC, from immediately picking up the news.
Let’s go back to what the signals were that something was fishy. The first is the obvious one. I mentioned before that there’s just basically a snowball’s chance in hell that any major retailer is going to work with Litecoin in 2021. The second, I believe, is in the content itself. Some of these are pretty subtle, but as someone who’s written a fair number of press releases, I think they’re worth noting. First, the supposed quote from Walmart CEO has a strange phrase, “we will enable shoppers to experience a very smooth checkout experience with near instant transaction confirmation” that I just don’t know any PR firm who would let that sort of phrase go through, but admittedly, that’s the most minor of my quibbles. The second, and more egregious, is that Charlie Lee is not the CEO of the Litecoin Foundation, because the Litecoin Foundation doesn’t have a CEO, it has directors, of which he is a managing director. That’s a pretty big one. Third, there are some phrases that make me think this was not written by a native English language speaker. For example: “Now with this partnership, Walmart will offer their shoppers to use Litecoin to benefit from the features of the cryptocurrency. It’s just super awkward phrasing that anyone who’s paid for a living to write press copy wouldn’t use.
And finally, there’s the two paragraphs of awkwardly phrased pitch for Litecoin rather than anything about “Walmart’s innovation, Walmart’s creativity, Walmart’s blazing the trail for other companies to follow suit,” which is what would be at the end of a press release if it was really Walmart pushing it. The last line isn’t something like: “With this new partnership, Walmart cements its place as one of the world’s most innovative retailers,” but instead is: “Litecoin also processes financial transactions a lot quicker.” Now, those things might not seem major to you. But we have to remember that what we’re discussing is the fact that mainstream media outlets reported this as true. And they’re used to reading these sorts of press releases. These are the sort of context clues that it’s not just me, but people in newsrooms should have and frankly, have even better than I do. But I’m still burying the lede here. These, like I said, are all context clues for people who are used to reading press releases, but they’re not the really big things.
So what were those? Well, first of all, while this press release was distributed through a wire service, it was not shared via Walmart’s official press site. It’s kind of a big thing. Usually, when a press release goes out from a corporation that has a press site, it goes out simultaneously to that press release being on their site, because people want to be linking back to their corporate site, not just the press release homepage. Second, if one reversed search the account of the company that published the wire, “Walmart, Inc.,” on the database of global news wire who’s pushed through, you’d have found that they never published anything else. Okay, weird. So we’ve got nothing on Walmart site plus no track record of other press releases with this wire service, Global News Wire. What about the press officers contact email? It’s “walmart-corp.com.” That’s official, right? No. Walmart’s corporate site is “corporate.walmart.com.” So what about “walmart-corp.com?” Well, Steven at The Block, aka Dogetoshi, did a basic domain search and found out that “walmart-corp.com” had been registered just one month ago.
The point is, the press release was clearly fishy. But, Walter Bloomberg slammed the headline, Zero Hedge slammed the headline and most problematically by far, is that the official Litecoin account even tweeted it. That, I think, will go down either as a stupid, uninformed click of a social media intern or as part of the fraudulent scam. Either way, Litecoin moves, it jumps 30% in a few minutes, but it didn’t take long before Walmart officially denied the press release. Every outlet changed back their story to say “oops, this was fake” and Litecoin’s price crashed again. Tweets were deleted to save face and so on and so forth. But then I saw this tweet and I just about lost my s**t.
It’s from Nick Bilton, who’s an author of Vanity Fair, a New York Times journalist. He wrote: “Litecoin tweeted a bogus press release that Walmart planned to start accepting Litecoin. Mainstream outlets picked it up without checking, even fake quoting Walmart CEO, all part of a giant pump and dump. Only a matter of time before the industry is heavily regulated.” Look, you only need to read the comments to get a sense of what I was feeling when I read that. Ryan Selkis from Messari says: “Tell your colleagues to stop sucking at their jobs.” Anthony Wassano says: “So instead of calling out the abhorrent reporting standards of mainstream media, you call for regulation of crypto. LMAO GTFO.” I, personally couldn’t help myself either and sub tweeted: “News media: doesn’t do its job fact-checking news. News media: shares bogus story. News media: it’s crypto’s fault, regulate them!” I still feel that way.
But let’s try, for sanity’s sake, to break this apart just a little bit more. And let’s start with media’s role in this. This was a scam designed to prey on the failures of click-based news. They knew that all press release wires are effectively the same. They’re all just pay-to-play. And two, that given how much journalism is just a game of who publishes first, few were likely to take the time to vet this thing before reporting. And that’s exactly what happened. Everyone in media, including, sadly CoinDesk, Decrypt, Blockworks. And really everyone with the one exception, this time of The Block, raced to get it out first. It is ultimately the job of news organizations to get this sort of thing right. It may be normalized at this point to just trust whatever comes through the wires, but that should itself be questioned given that they’re available to anyone willing to pay the $1,000 bucks or so to get them published. I really can’t stress enough that this was a scam designed to target the media and it worked.
Second, let’s discuss the sophistication of the scam. I shared all the reasons why the press really shouldn’t have passed the sniff test. But there was some who argue that overall Still, the scam was somewhat sophisticated. Frank Shapiro from The Block tweeted: “I wouldn’t be surprised if there was an organization or trading desk orchestrating fake pump news, Walmart and Litecoin, Amazon accepting Bitcoin, CME Dogecoin futures and profiting on the swings. This latest press release was the most sophisticated trick despite red flags, stay vigilant and do your own research.” Adam Cochran, who is now a crypto investor, but has been in PR and marketing for most of his career said: “Yeah, I will say that Walmart press release was actually well written enough that I believe it was a mid-level PR person at an agency. And it was perfectly timed with the Eastern Monday open, had all the right names and right language. Seems it was a lot of planning and care, knowing that a company would drop that kind of news around an open, as well as surprisingly niche knowledge that you only really find in financial markets and press releases that deal with fortune 500s. I doubt even that the average crypto user would think of that either.”
Now, as you heard in my discussion, I don’t think that it was particularly well written. I think there were many contextual red flags, but I still wanted to share that perspective. Because obviously, I’m just one perspective. So as Adam and I think, it’s worth noting that not everyone now that they’re looking at it in retrospect is like “Oh, yeah, it was super clear.” Also, Adam Cochran goes on to explain that this is sort of new precedent that in his time in press releases, he’d never seen an out and out fake press release pushed through the wires. He speculated that that was likely because traditional financial markets just aren’t volatile enough to respond to it in a way that would make it profitable, but clearly crypto can be. And ultimately, that’s the thing that this is really going to come down to.
I am sitting here so frustrated because this just poured absolute gasoline onto the fire of anyone trying to tell the world that crypto is just for scammers. Gary Gensler is testifying before the Senate Banking Committee tomorrow, and it’s hard to imagine that this won’t come up. It will reinforce the priors of people who don’t like us. It will make it harder for our allies promoting legitimate use to shift the narrative. Caitlin Long tweeted: “The agency that will go after today’s scammer isn’t the SEC. It’s the Department of Justice. And with Walmart’s help and the help of all the news outlets that mistakenly fell for it, no doubt,. Law enforcement requests for info on who traded Litecoin already going out to the exchanges as we speak.” So, as we round out this insane story, insipid and frustrating on so many levels. I just like to close with a hearty and official “Breakdown” “F**k you” to the scammers behind this for all the muck and mess you’ll cause in your wake. Grow up and trade JPEGs like everybody else. So until tomorrow guys, stay safe take care of each other. Remember, friends don’t let friends trade Litecoin. Peace!