Litecoin Hit After Payment Processor LitePay Shuts Down

Litecoin, the fifth largest cryptocurrency by market capitalization on CoinMarketCap, tumbled on the news that payment processor LitePay has ceased all operations.

The San Francisco-based LitePay was launched in the middle of February as a merchant payment processor accepting Litecoin. Litecoin rallied mid-February on the LitePay news.

The incident prompted Litecoin creator Charles Lee, who goes by the Twitter handle SatoshiLite, to apologize to the cryptocurrency community.

Litecoin fell nearly 10 percent on Monday after the news broke to as low as $139.42. As of 9.44 am ET on Tuesday, the cryptocurrency was down 7.1 percent at $142.01 on Coinbase.

The Litecoin Foundation, a non-profit created to promote Litecoin, announced that it was informed by LitePay CEO Kenneth Asare “a couple of day ago” that he “has ceased all operations and is preparing to sell the company.”

On Twitter, Lee said, “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,” he added.

The payment processing platform supporting Litecoin was expected to go live on February 26. However, LitePay said in a Twitter post on February 27 that account registration was ongoing.

In a Reddit “Ask Me Anything” session on March 16, Asare said 6,500 merchants applied and LitePay was going through the due diligence process with just under 2,000.

The AMA raised several doubts in the Litecoin community regarding the working of LitePay, with several members raising the issue of lack of transparency.

The Litecoin Foundation said Asare had asked extra funds to continue operation around the time of the Reddit AMA.

However, the foundation refused any further funding to Asare “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.”

“Litecoin was doing perfectly fine before the promise of LitePay and will continue to do so,” the foundation added.

Regulators in the US have been warning investors of scams related to cryptocurrencies and initial coin offerings. The crackdown unearthed several scams over the past few months.

Social media networks and instant messaging services such as Google and Twitter are also on guard and they have banned cryptocurrency-related advertisements on their platforms.

by Jyotsna VRTTNews Staff Writer

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