Back to the list

FBI Investigating Beverage-Turned-Blockchain Company Long Island Iced Tea for Insider Trading

www.cryptoglobe.com 26 July 2019 08:32, UTC
Reading time: ~2 m

The beverage-turned-blockchain company Long Island Iced Tea may be in for more bad news ahead following a report that the Federal Bureau of Investigation (FBI) has issued a search warrant for possible insider trading.

Long Blockchain

Long Island Iced Tea became infamous during the epic bitcoin bull run of late 2017 for pivoting away from being a beverage company to cryptocurrency mining.

On Dec. 21, 2017, the beverage brewing company abruptly switched its name to Long Blockchain. Investors bought into the hype in the ensuing madness, with the price of Long Blockchain’s stock jumping 300%.

It was downhill from there for the company.

Following the crash in cryptocurrency prices, Long Blockchain was delisted from the Nasdaq stock market and came to epitomize the blockchain craze from just months earlier.

FBI Gets Involved

New details have emerged in the situation, including an investigation by the FBI and US financial regulators into possible insider trading. The FBI issued a search warrant request back in May, which seeks to examine evidence for insider trading and securities fraud in connection to Long Island Iced Tea.

According to the warrant , the case centers around a hacked iPhone 6 which includes conversations between two criminals, Oliver Lindsay and Gannon Giguiere, discussing Long Island Iced Tea. Both men were arrested in a separate case over securities fraud.

The FBI is also investigating Long Island Iced Tea stock for running a “pump and dump” scheme. Promoters may have been artificially buying and hyping the cheap stock prior to the blockchain announcement, before dumping it on the public in the ensuing 300% price increase. Such actions are considered illegal by the US Securities & Exchange Commission (SEC), which could further implicate those involved in the Long Island Iced Tea fiasco.

Joshua White, assistant professor of finance at Vanderbilt University, explained that the emergence of new technology has historically been met with market manipulation.

He continued,

“Anytime there’s a new technology like blockchain, and there’s any kind of mania around it, this is what the fraudsters take advantage of. It’s a winning formula.”

White said a similar pattern had occurred at the turn of the century with internet stocks and more recently following the legalization of marijuana in the US.

Back to the list