Litecoin has taken a significant price hit since promised payment processor LitePay has informed them that it has closed up shop.
What Went Wrong?
On Monday, March 26 the Litecoin Foundation, a non-profit dedicated to the advancement of Litecoin and an investor in LitePay, announced on its website that LitePay CEO Kenneth Asare informed them that LitePay had ceased operations and was being sold.
As news that LitePay had folded went public Litecoin dropped down to $141 having lost nearly ten percent of its value since 4:08 ET. Continuing on a downward trend of losing 28% this month and over 37% so far in the year according to CoinMarketCap.
Litecoin experienced a mid-February bump when LitePay announced its merchant payment processing system for Litecoin would be up and running on Feb. 26.
As the go date came and went LitePay eventually sent an email to customers on March 5 saying that it was “checking all perspective merchants” and suspending card registrations “due to the negative perception and drastic actions card issuers have towards cryptocurrency companies.”
This statement was in reaction to an announcement made by Mastercard and Visa that they were changing the way cryptocurrency transactions would be processed from purchases to cash advances resulting in more fees for users.
LitePay was supposed to be an easy way to make cryptocurrency transactions anywhere with only a couple of clicks of the mouse. It was also supposed to include LitePay Debit Cards. Cards that would enable users to transfer Litecoin units from any digital wallet to the card in order to pay for goods and services wherever major credit cards are accepted. It was also supposed to enable the exchange of LTC to any currency in the world via ATM.
Litepay has not sent out a customer update since the March 5 email.
Charlie Lee Reacts
The Litecoin Foundation said it had refused a request from Asare for more funding after his “Ask Me Anything” Reddit session raised serious questions about what the funding was for.
The creator of Litecoin Charlie Lee took to Twitter to express his disappointment and to apologize for not thoroughly vetting Litepay before throwing the support of the Litecoin foundation behind the venture, he wrote.
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. https://t.co/khIjeHnyZ1
— Charlie Lee [LTC⚡] (@SatoshiLite) March 26, 2018
The declines Litecoin experienced on Monday were felt by other coins as well. Bitcoin went under $8,000 as the all top ten Cryptocurrencies fell into the red according to CoinMarketCap.
The Litecoin Foundation looked to reassure it’s investors by posting “Litecoin was doing perfectly fine before the promise of LitePay and will continue to do so,” on its site.