Litecoin Founder Who Beat 90% Plunge Now Finds Shadow Over Coin
(Bloomberg) -- Litecoin founder Charlie Lee says he’s focusing on increasing use of the eighth-largest cryptocurrency rather than dwelling on his fortuitous decision a year ago to sell all his holdings at the height of the digital-asset market bubble.
At the time, Lee said the liquidation was aimed at preventing a “conflict of interest” when making comments on the virtual currency. The decision hasn’t sat well with critics who accused him of recognizing the mania and cashing out ahead of the roughly 90 percent decline in the value of the token.
“People lose money and they want someone to blame," Lee said in an interview Tuesday. “And they think for some reason I had inside information, and that’s silly. At the time when I sold, everyone thought it would go to $1,000.”
Lee announced his decision on Dec. 20, 2017, a day after the token reached a record high of about $375. It’s been falling ever since, and is now trading at about $30. The sale was done via several trades at an average price of about $200, he said.
The controversy may be the least of his worries with few people using the coin. The number of transactions, which includes everything from trades by speculators to payments accepted by merchants, has plunged since peaking in January.
Lee’s focus is on increasing use by merchants. While saying he couldn’t provide any statistics on how the adoption is going, Lee mentioned that he has been advising Taiwanese mobile-device maker HTC Corp., which recently released a smart phone designed to store and trade cryptocurrencies.
The San Francisco area-based Lee created Litecoin in 2011 by replicating and tweaking Bitcoin’s code while working as a software engineer at Google. He then served as director of engineering at crypto exchange Coinbase Inc., which listed Litecoin while Lee was still on the payroll. He left soon after the listing to focus on Litecoin promotion and development.
Most of his peers have had a financial stake in their coins’ success. Vitalik Buterin, a co-founder of Ethereum, recently disclosed his holdings and some trades. Chief executives at public companies are traditionally awarded stock and options in order to have some skin in the game.
“It’s fine for a pure investor to decide something is worthless and sell without notice,” said Aaron Brown, a business author and investor who writes for Bloomberg Opinion. “But someone who continues to work in a sector while surreptitiously taking financial exposure to zero doesn’t look good. Not illegal, just less than forthright.”
Lee, 41, declined to say how much Litecoin he once owned, noting that he was already wealthy before the liquidation. He donated some of the proceeds to institutions such as the Litecoin Foundation, where he is on the board of directors, and to Massachusetts Institute of Technology’s Digital Currency Initiative.
"It definitely had some effect on people’s confidence in Litecoin, because people are used to traditional public companies, ” Lee said. “Unlike CEOs of public companies I am not paid to increase the shares of the companies."
Lee owns a small amount of Litecoin that he uses for transactions. And he said he may still donate some more of his proceeds from last year’s trades.
"My sense is that there will be a handful of cryptocurrencies that actually will be used as money," Lee said. “There’s obviously a lot of scams and currencies not useful at all, and those values will plummet. You are going to see some coins die, and the strong will survive."
©2018 Bloomberg L.P.