Long Island Iced Tea Corporation is under investigation by the FBI for their name change in 2017 to “Long Blockchain.” The FBI claims that the company was involved in insider trading and fraud.
The FBI is looking closely at a notorious incident which occurred in December 2017. Long Island Tea Corporation rode off the blockchain hype then, changing their name to ‘Long Blockchain’ which caused their stock to rise by some 300%.
Since then, the company has been completely rendered illegitimate by institutions and authorities alike. The Nasdaq delisted the company in 2018 and it has been investigated by both the SEC and FINRA. Now, the FBI is stepping in to prove, once and for all, that certain individuals were behind a pump-and-dump scheme.
The two individuals being investigated are Oliver Lindsay and Gannon Giguiere, both of whom were previously charged with securities fraud in another case. The FBI claims that the duo rebranded to pump the stock up, buying some in advance, and then dumping it on investors once it rose 300%. The profits were distributed to all those involved, likely in offshore bank accounts. At the height of the hype, the company was valued at more than $60M but has since plummeted to $9M.
Another suspect is Long Island Iced Tea Corp’s executive chairman, Julian Davidson. He resigned a few days before the name change, but he is still under investigation.
The SEC has been closely monitoring companies who have been riding off the blockchain hype purely for purposes. it has been part of the agency’s expanded crackdown since 2018. In January of 2018, Jay Clayton put out a warning shortly after the Long Island Iced Tea controversy broke.
As of now, the company is still operating and now specializes in gift cards and loyalty programs. However, it has been operating at a loss for some time now.
Do you believe the company will be permanently shut down by the authorities as a result of the FBI investigation? Let us know your thoughts below.
Image courtesy of Gizmodo.