The Magic of the Cryptocurrency World

On September 13, a news announcement from Walmart declaring support for online payments with Litecoin went viral across global social networks.

The Litecoin Foundation's official Twitter account retweeted the collaboration news; authoritative overseas media such as Bloomberg, Reuters, and CNBC reported on it; domestically, many top-tier media outlets also shared the news.

Affected by the positive news, LTC surged over 28% in an instant, driving up Bitcoin and other cryptocurrencies collectively.

Cryptocurrency investors were in high spirits, rushing to buy, but just a few minutes later, the official Litecoin Twitter account deleted the tweet about the Walmart collaboration, and Walmart clarified that it was fake news.

LTC plummeted sharply, reversing from a 28% increase to a 1% decrease, dragging the entire market down, with a series of candlestick patterns trapping investors who were liquidated or stuck.

According to bybt data, within an hour of the news release, the overall liquidation amount in the crypto market exceeded $200 million.

How did the hidden hand behind the scenes fabricate fake news that fooled most mainstream media and investors worldwide?

Why did authoritative media like Bloomberg and Reuters fail in the cryptocurrency space?

Who will be responsible for the investors' losses?

How Fake News Ferments

Looking back at this fake news incident that harvested the cryptocurrency world, it cannot be separated from GlobeNewswire.

Among global news agencies, besides professional news organizations like the Associated Press and Thomson Reuters, there is a special category of entities, business and financial news agencies.

These agencies can be considered "public relations companies," whose core business is to charge companies for distributing press releases to global media channels, including press release distribution, public opinion monitoring, etc. This type of agency mainly includes PR Newswire, Business Wire, and the protagonist of this incident, GlobeNewswire.

Typically, when companies release significant news, they will publish official PR materials on platforms like PR Newswire and then distribute them globally.

The hidden hand seized on a loophole to manipulate the market with fake news.

First, the hidden hand registered a seemingly Walmart-related domain name, walmart-corp.com, in August and applied for an email address.

Subsequently, they registered WalMart Inc on GlobeNewswire, completing the registration application by filling out four sets of information, including company information, personal information, and contact details. The staff would complete the review within two days.

This was the most critical step in the entire incident. Clearly, the hidden hand successfully deceived the backend review process with information related to the fake domain name, leading to a successful registration. Based on the footer information of the fake press release, it can be inferred that the hidden hand disguised itself as Walmart CMO William White during registration.

On September 13, a day of continued decline in the cryptocurrency market, the hidden hand officially began work, releasing a PR announcement on GlobeNewswire stating "Walmart announces partnership with Litecoin."

It is worth mentioning that the content of this release was a standard press release, containing both "news facts" and "interview" information about the main responsible parties, making it difficult to detect any anomalies from the content.

As the news fermented, Bloomberg terminals captured this news dynamic, and Reuters, CNBC, Yahoo Finance, Coindesk, and other media outlets reported it as a headline, with domestic media also sharing it.

They did not verify with Walmart's official sources but directly quoted the "fake news" from GlobeNewswire.

More importantly, the official Litecoin Twitter account also retweeted this fake news release, alleviating many investors' doubts.

Affected by the positive news, the cryptocurrency market surged in euphoric sentiment, with LTC quickly rising, reaching an increase of nearly 30%, and driving up Bitcoin, Ethereum, and other assets.

However, it wasn't long before someone noticed something was off.

First, this dynamic was not found in Walmart's official news center; second, the information released by Walmart Inc only included this single news item; and the contact email's domain, walmart-corp.com, was registered in August…

Of course, the most bewildered was Walmart itself. Upon seeing the news of Walmart accepting Litecoin payments appearing in major media, spokesperson Randy Hargrove urgently refuted it.

The spokesperson stated that the company had not established a partnership with Litecoin and that Walmart had contacted GlobeNewswire to investigate how the fake press release was published.

The official Litecoin Twitter account also deleted the content regarding the partnership with Walmart.

Is the Litecoin Foundation the hidden hand behind this fake news incident?

In an interview with Bloomberg, Litecoin founder Charlie Lee stated that he only has about 20 Litecoins and has no motivation to participate in any plans to boost the value of this cryptocurrency.

He explained that the content posted on the company's Twitter account regarding the partnership with Walmart was a "mistake caused by excessive excitement," and the fake announcement was "an unfortunate situation."

After Walmart's refutation, media outlets like Reuters and CNBC deleted their articles and clarified, but for the investors who rushed in, there was no remedy.

Who Will Sanction the Hidden Hand?

For the hidden hand that fabricated the fake news, the profit model is simple and clear.

Before releasing the fake news, they built long positions in LTC futures contracts. When the fake news fermented and mainstream media reported it, LTC surged, allowing them to close their long positions. Meanwhile, they set up short contracts at high levels, waiting for the refutation. When LTC's price returned to its original state, they took profits on their short positions.

Back and forth, a dual harvest.

To avoid exposing their identity, the hidden hand used an anonymous identity service provided by an Icelandic company, "Withheld for privacy," when registering the domain name.

Who will sanction such arrogant market manipulation?

In traditional capital markets, whether in China or the U.S., disseminating false or uncertain significant information constitutes the crime of manipulating the securities market, which is a criminal offense.

In China, according to the criminal law amendment (XI) passed in 2020, for fabricating and disseminating false information related to securities trading and other information disclosure fraud, the amendment raised the maximum prison term for relevant responsible personnel from 3 years to 10 years.

In the U.S., the Litecoin fake news incident has sparked public outrage.

Nick Bilton, director of the HBO hit series "FAKE FAMOUS," tweeted that these market manipulation practices will ultimately lead to severe regulatory crackdowns; it is only a matter of time.

Caitlin Long, founder of Avanti Financial Group, tweeted that "now, the agency dealing with fraudsters is not the SEC, but the Department of Justice. As we speak, law enforcement has already requested information from exchanges about who is trading LTC."

In addition to the hidden hand behind all this, GlobeNewswire and the Litecoin Foundation are also culpable.

Currently, the fake news has been deleted, and GlobeNewswire stated that the company is strengthening its verification work before information release and will cooperate with relevant agencies to investigate the false announcement regarding the partnership between Walmart and Litecoin.

They emphasized that this was merely an "isolated incident that has never happened before."

The Litecoin Foundation also issued a statement regarding this incident:

We feel it is necessary to comment on the recent fake news about the Litecoin Foundation and Walmart announcing a partnership. This is not true; the Litecoin Foundation has not established any form of partnership with Walmart. This morning, a seemingly official fake press release was issued on GlobeNewswire. It is not our policy to release partnership announcements in this manner. The quotes in the article itself are also fabricated and did not come from Litecoin founder Charlie Lee. Several media outlets, including Reuters, did indeed report this story first. In response, one of our social media team members was a bit too eager and shared it on the official Litecoin Twitter, but this was quickly deleted, and we have taken measures to correct future issues. Our marketing team has been responding to inquiries, confirming that this is indeed fake.

Using Media to Manipulate the Market

In the relatively chaotic and disorderly cryptocurrency space, using certain messages to influence the market is not uncommon and has even become a default method to some extent.

Cryptocurrency blogger "Two Comma Pauper" elaborated in May this year on how to use media hype to short the market.

He entered the cryptocurrency market in 2016 and established a service company primarily engaged in four types of work:

Legal and regulatory services Solidity development, helping to develop "junk coins" Marketing and public relations, helping projects gain traction OTC

If one wants to short the market, they typically choose to do the following:

Step one, pay several low-tier media outlets to publish bearish news but not promote it on their channels, just leave it there temporarily.

Step two, pay a few writers from Bloomberg/Forbes to quote the viewpoints of this article in their reports. In his view, this is easy because:

(1) Authors are relatively more in need of money (the "hungry writer" meme is real)

(2) They are in urgent need of fresh content material

(3) Compensation is related to the traffic generated by their stories

Note: Some have questioned the price list provided by Pauper, and its authenticity remains to be verified.

Then, the desired content appears simultaneously on some low-tier news websites and some high-profile sites.

At this point, the "big players" can pull out their contact lists and call in those "well-connected" technical analysis experts to get involved.

Content materials are available on various websites from NewsBTC to Reuters, and they are all legitimate.

These analysts post these stories or their variants on Twitter and use human nature and emotions to choose certain keywords for emphasis, such as "policy ban," "hacker," etc.

Then, the "big players" need to cooperate with algorithm mechanisms to initiate a dump; they will choose exchanges with relatively poor trading depth to conduct large-scale sell-offs, exacerbating retail panic.

When retail investors sell off en masse, they have already placed buy orders at the bottom, picking up the bloodied chips.

In the dark forest of the crypto world, there are always shotguns lying in wait.