Litecoin continued to drop on Tuesday following news of the abrupt shutdown of payment processor LitePay. Litecoin, the fifth-largest cryptocurrency by market capitalization at $8 billion, is down about 30 percent for the month and 40 percent for the year so far.
Litecoin rallied in mid-February after LitePay's announcement that its merchant payment processing system for litecoin would go live on Feb. 26. LitePay promised to issue a debit card that could be used anywhere that accepts debit cards for users to spend their litecoins. According to LitePay’s website litepay.us, “Merchants will be able to accept Litecoin (LTC) without worrying about the current price volatility in cryptocurrency. When you spend Litecoin at the store, LitePay instantly converts the Litecoins into the local fiat currency and deposits the money into the merchant’s bank account.”
But, on March 5, LitePay claimed it was “checking all perspective merchants and holding off on card registrations” due to the “negative perception and drastic actions card issuers have towards cryptocurrency companies.” LitePay has not issued an update since.
The Litecoin Foundation and Litecoin creator Charlie Lee have since issued apologies for the apparent exit scam.
The Litecoin Foundation, a nonprofit for advancing Litecoin and an investor in LitePay, announced on its blog that Kenneth Asare, CEO of LitePay, had informed the foundation “that he has ceased all operations and is preparing to sell the company.” The blog post continued: “Kenneth asked the foundation for more funds to continue operations. The foundation refused any further funding as he was unable to provide a satisfactory picture of where the money had been spent and refused to go into exact details about the company and show objective evidence to back up his statements. We are greatly disheartened that this saga has ended in this way and we apologize for not doing enough due diligence that could have uncovered some of these issues earlier.”
Litecoin creator Charlie Lee said in a tweet: “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. I am sorry for having hyped up this company and vow to do better due diligence in the future.”
The Litecoin Foundation later issued a hopeful statement on its website litecoin-foundation.org: “The ecosystem is far bigger than one company and is continually growing with support from many others with market-ready products joining the space and fulfilling their promises to make it easier for the world to use Litecoin.”
By: BGN Editorial Staff