Long Blockchain Corp has been hit by an FBI search warrant in relation to their 2017 name change, which drew suspicions and derision at the time. The formerly named Long Island Iced Tea made the pivot to Long Blockchain Corp. in December 2017 at the height of the crypto craze, a move which saw the share price leap 289%. The past might be about to catch up with the New York-based company however, as the Securities and Exchange Commission (SEC) now suspects them of insider trading and has asked the FBI for assistance.
Long Blockchain Corp. is Born
In December 2017, Long Island Iced Tea, fed up with a share price that had seen an 83% reversal in the prior 18 months, changed the company name to Long Blockchain Corp. in alliance with a shift in “primary corporate focus”. This coincided with the peak of the crypto craze, leading many to suspect the motives were less than pure. Investors didn’t seem to mind however, with the share price jumping 289% within a week, reversing the past six months’ losses. Any joy was short-lived however when the Nasdaq delisted them due to suspicions that the change was purely to raise the stock price, and eight months later the SEC got in touch asking for “certain documents” in relation to the name change. By this point, the gloss had well and truly worn off the name change, and the share price had not only crashed back to where it was prior to the change, but a further 90% beyond this.
Pump and Dump Suspected
Fast forward to July 2019 and an SEC investigation into another company, Kelvin Medical, saw phones seized that revealed discussions that appeared to contain “confidential information regarding LTEA” between individuals at the two companies, which is suggestive of insider trading. Indeed, an FBI agent is quoted in the filing as saying that the case “refers to common aspects of a pump-and-dump campaign”, where the price of an asset is temporarily raised, causing people to FOMO in, before the first buyers sell out at the top and drop the price again. The charts certainly suggest this, and if the FBI finds the same discussion on Long Island Blockchain’s devices it could be game over for the iced tea manufacturer…sorry, the blockchain developer.