LitePay, a payments based service, and the Litecoin (LTC) Foundation have apologized to investors and the general about ceasing LitePay operations, in a statement dated March 26. LitePay had abruptly ceased its operations just before making the announcement. Industry observers were quick to term it an alleged ‘Exit Scam.’
The Litecoin Foundation received a statement from Kenneth Asare, CEO of LitePay, a few days prior to the press statement. Kenneth reportedly asked the Litecoin Foundation for an additional round of funding, that would be used to grow LitePay as a service. The Foundation donated $50,000 to LitePay prior to its failed launch. On March 26, Charlie Lee stated that the team were excited to support merchants and promised better due diligence in the future:
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
A venture that started in December 2017, LitePay aimed to bring ease of use for holders of Litecoin. Using its services, users could pay using LitePay, and it would also enable merchants and retailers to accept hassle-free payment in LTC. The company also announced a debit card, which could be used to convert LTC to USD with ease. The Litecoin Foundation took to Twitter to thank LitePay for the product they were creating. “Finally, someone is taking the opportunity to create litepay.us. Good job!,” said a tweet from the Foundation.
With the release of this announcement in December, Litecoin (LTC) grew multifold in value. Later in February 2018, LTC got another bump after LitePay announced its service would be up and running on February 28. However, after this statement, LTC-USD has fallen to $135.47, down almost five percent over the past 24 hours. The altcoin has lost just over 15 percent since March 26.
Warning Bells at LitePay Founder’s AMA
Prior to this announcement, the Litecoin foundation had approached Asare, regarding his unoptimistic answers during a Reddit AMA.
The foundation exclaimed at the lack of transparency and unsatisfactory answers, and several Redditors demanded information on LitePay’s team and business. Asare did not respond to these questions and abruptly ended the AMA after only a few posts.
Following the AMA, the Foundation noted that Asare asked them for more funds to continue LitePay, to which 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.”
The Litecoin Foundation made a similar statement in its post:
“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. We are currently working hard to tighten our due diligence practices and ensure that this does not happen again.”
Another Litecoin Startup, LitePal, Looks Like A Scam
Hours after LitePay’s exit scam, the Litecoin subreddit took note of another scam-like situation in LitePal.
LitePal, which claims to be “cheaper, faster and more secure compared to conventional payment methods,” was noted as having a single-page static website, with dead links at the bottom of the page and no detailed information about the site anywhere else.
Twitter user Gegidan shared screenshots and other legal reports on his tweet, which does raise serious red flags and questions about the LitePal project.