Cryptocurrency litecoin falls 10% after payments processor ‘LitePay’ closes; ‘We got too excited,’ coin founder says

Finance news

Litecoin dropped Monday after news that payments processor LitePay has ceased operations, prompting an apology from the coin’s founder for promoting the start-up.

The cryptocurrency traded roughly 10 percent lower near $145 as of 4:08 p.m. ET, according to CoinMarketCap. Litecoin is down about 28.5 percent for the month and 37.5 percent for the year so far.

Litecoin rallied in mid-February, partly due to LitePay’s announcement that its merchant payment processing system for litecoin would go live on Feb. 26. But in an email to customers on March 5, LitePay said it is still “checking all perspective merchants” and is holding off on card registrations “due to the negative perception and drastic actions card issuers have towards cryptocurrency companies.” The company has not sent out an update since.

Litecoin 12-month performance

Source: CoinMarketCap

On Monday, the Litecoin Foundation, a nonprofit for advancing litecoin and an investor in LitePay, said on its website that LitePay CEO Kenneth Asare informed the organization a “couple days ago” that “he has ceased all operations and is preparing to sell the company.”

The foundation said it refused Asare’s request for further funding after a Reddit “Ask me anything” session on March 16 raised questions about how the funds were being used.

“Like everyone else, we got too excited about something that was too good to be true and we optimistically overlooked many of the warning signs,” litecoin creator Charlie Lee said in a tweet. “I am sorry for having hyped up this company and vow to do better due diligence in the future.”

Lee said in December he “sold and donated” nearly all his litecoin holdings.

In February, Asare said in an email to CNBC that his team has been working on development since the summer of 2017. “Our goal is to create a way for merchants to earn Litecoin, which is a particularly good cryptocurrency for payments,” he said.

Asare did not immediately respond to a CNBC email for comment Monday.

Litecoin is the fifth-largest cryptocurrency by market capitalization at $8.1 billion, according to CoinMarketCap. Its declines Monday came as other cryptocurrencies also fell. Bitcoin dropped 7 percent to below $8,000.

“Litecoin was doing perfectly fine before the promise of LitePay and will continue to do so,” the Litecoin Foundation said on its website.

U.S. regulators and companies have taken steps in the last few months to crack down on fraudulent activity in cryptocurrencies. The U.S. Securities and Exchange Commission has frozen the assets of those involved with some token sales, and Texas has issued several cease-and-desist orders on cryptocurrency companies. On Monday, Twitter followed Google and Facebook in announcing a ban on advertising for cryptocurrencies.

Link to the source of information: