It's all recorded on the Blockchain, I don't believe it has anything to do with it being tracked or not, it's the fact Litecoin is not thier coin that they control, this goes for Bitcoin and any coin really. Anyone can view the Blockchain, anyone can track it, they don't like that, they don't want any coin where anyone can see and track where they shift their funds to. They like the idea of a digital currency, a cashless society, dependent completely on their system of control, where they can track you, but you can't track them.
RE: Litepay dead, but there is plenty other Good News for LTC