Litepay, the payment processor offering merchant services and debit cards for Litecoin has closed shop sparking suspicions of foul play.
A statement posted by the Litecoin Foundation says that “Kenneth Asare, CEO of LitePay, informing us that he has ceased all operations and is preparing to sell the company.”
Litecoin’s value shot up suddenly in mid-February against a general downward trend in the market after an announcement of the partnership. Soon thereafter, LitePay said the decision by some major banks to stop supporting cryptocurrency purchases had affectedt its operations.
Litecoin Apologises
The closure has prompted Litecoin Foundation to issue an apology over the debacle.
“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,” the statement from the foundation said.
Litecoin creator Charlie Lee also issued an apology in a tweet. “I am sorry for having hyped up this company and vow to do better due diligence in the future,” he posted. Lee had been active in promoting the start-up.
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 Ⓜ️🕸️ (@SatoshiLite) March 26, 2018
Litecoin has assured its customers that its operations will continue as usual.
Value Wiped Off
Litecoin lost about 10% of its value after the news broke on Monday. Its price has since steadied. At 16.37GMT, the cryptocurrency was trading at $144.31 according to CoinMarketCap.
Like most leading cryptocurrencies, Litecoin has not regained its highs in December and January when the market was at its peak. Litecoin which is ranked fifth by market capitalisation has continued to slide, losing almost 30% of its value in the last one month alone.
Litecoin has a market capitalisation of slightly over $8 billion. The development coincides with a Twitter ban on cryptocurrency advertisements, the latest move from technology companies and regulators to set back the highly volatile market.
Other cryptocurrencies have been dipping on the wake of the ban. Bitcoin dropped below $8000 on Monday after the ban was announced. The total cryptocurrency market is now estimated to be worth $309 billion according to CoinMarketCap.
New Card Registrations Stopped
Earlier this month, LitePay said it was stopping all new card registrations in what it said was “negative perception and drastic actions card issuers have towards cryptocurrency companies.”
Several banks banned their customers from using their issued credit cards to make cryptocurrency purchases after the February crash amid a flurry of claims.
LitePay had a goal of creating a marketplace where merchants would earn Litecoin.
It had made last ditch efforts to keep afloat, even asking the Litecoin Foundation – charged with promoting Litecoin for more funding. The request was however declined. Litecoin Foundation had invested in the start-up but it was not clear how the funds were used.
Litecoin Foundation says LitePay CEO Kenneth Asher had approached “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,” a statement from Litecoin Foundation says.