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Litecoin plunges after fake Walmart partnership

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Digital currency investors had a fresh dose of volatility this morning. Litecoin surged 25% after many news outlets announced that Walmart had sealed a partnership to accept the cryptocurrency as payment on all its stores. However, as the morning went on, many traders pointed out that Walmart’s announcement had not been verified and that the news might indeed be a hoax.

At 11 am ET, Litecoin plunged back to earth in a spectacular fashion as Walmart’s executives denied the veracity of the news, and media outlets like CNBC were forced to rectify and retract the information. The price surge went from $174 to $ 232 and back to $179 at mid-session. Litecoin is currently considered the world’s 13th better-valued cryptocurrency and holds a market cap of $11.8 billion. It gained up to $4B in the market cap before going back to normal levels after the deal was revealed fake news.

The controversy involving Litecoin couldn’t have come at a worse time as regulators are looking to ramp up the regulatory pressure on all digital currencies. Tomorrow SEC Chairman Gary Gensler is set to appear before the US Senate, and digital currencies are expected to be among the most critical issues to discuss with senators during the meeting.

Experts in the matter, including the communications team at Coinbase, pointed out that this kind of move is not unique to cryptocurrency. According to traders, there have been similar controversies surrounding low liquidity stocks in the past, adding that regulators should not use this event to promote a crackdown on crypto shortly.

The controversy also caused effects in other cryptocurrencies such as Bitcoin, which lost value during the session after the chaos aroused by Litecoin’s movement. Reportedly neither the Litecoin foundation nor anyone associated with Walmart is responsible for the hoax. However, it is expected that the SEC would start an investigation into who released the fake information and whether this constitutes a crime.

Have you traded Litecoin? Let us know in the comments.

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