Currently the fifth most valuable cryptocurrency, Litecoin has enjoyed a massive surge of late: While a single Litecoin traded for approximately $US4 in March, theyr’e now listed at over $US300 a piece. But in a surprise move, the coin’s founder Charlie Lee announced in a Reddit post that he had divested his entire stake in Litecoin (except for a few physical Litecoin collectibles), citing an effective conflict of interest.
“[W]henever I tweet about Litecoin price or even just good or bads news, I get accused of doing it for personal benefit. Some people even think I short LTC! So in a sense, it is conflict of interest for me to hold LTC and tweet about it because I have so much influence,” Lee, who was also an early engineering hire for crypto trading platform Coinbase, wrote on r/litecoin. “For this reason, in the past days, I have sold and donated all my LTC.”
The crypto space is replete with shady founders developing altcoins that include a considerable “premine” – a scheme in which a large portion of coins are ceded to founders and early investors from the get-go, leading to disproportionate influence and the potential for “pump and dump” schemes. This makes Lee’s choice to not only walk away from his stake in Litecoin, but to do so publicly, an unusual one.
Lee declined to specify the amount of Litecoin he had held previously – a figure he’s been cagey about in forum posts for years. Without an announcement prior to sale or providing a means for other speculators to look up his transaction record on Litecoin’s ledger, some in r/litecoin are worried. “Coin creator sells all of his coins after price shoots up in the last 2 weeks and you guys are on here acting like he is some kind of hero,” one user wrote. Another responded that, “announcing it after the fact isn’t ‘for the good of Litecoin’, this is an exit.”
While an unencumbered founder may generate trust and goodwill in the short term, the question remains if Lee knows something Litecoin speculators don’t. Even the person (or people) who operated under the alias of Satoshi Nakamoto did not sell, donate, or delete their stake in Bitcoin before disappearing. Nor would it be an easy task to find a startup founder (an imperfect analogy to be sure) that did not have some level of investment in their own product. Lee notes in the same Reddit post that, “when Litecoin succeeds, I will still be rewarded in lots of different ways, just not directly via ownership of coins.”