Long Blockchain Corp of New York has received a subpoena from the Securities and Exchange Commission, according to Bloomberg. The news comes a day after the company completely changed its line of business for the second time.
The subpoena is dated 10/7/18. The company reported that it has been asked to provide the regulator with certain documents, but did not provide further details.
Long Blockchain Corp is well-known because of its previous identity, Long Island Iced Tea Inc, under which name it used to produce beverages. It re-branded to Long Blockchain Corp in December 2017, which caused its market capitalisation to jump 500% to almost $70 million. This is because blockchain hype was at its peak at that time.
However, the company did not actually offer any blockchain-related services. In April 2018 Nasdaq said that it plans to de-list the firm because it failed to maintain an adequate market capitalisation - the minimum requirement is $35 million for at least ten days, and the firm's current worth is less than $5 million.
So, what does Long Blockchain do?
A Google search for the company will present you with this confusing image:
Looking at its website doesn't really make things clearer. In an 'OUR SERVICES' section, it writes that it aims to become a "significant blockchain business" by investing in other blockchain businesses. It adds that it is "focused on developing and investing in globally scalable blockchain technology solutions."
Judging by these words, its goal is to be a blockchain-focused investment company at an unspecified time in the future. However, its website has not been updated since February.
It did commit to buying 2,000 cryptocurrency mining computers shortly after it changed its name. Then in February 2018, it announced that it would not be purchasing the devices after all.
In March it bought a 9.9 percent share of a London-based brokerage called Stater Blockchain. Later that same month the firm entered into an agreement to acquire another British blockchain company, Hashcove Limited. Interestingly, Stater Blockchain was supposed to acquire Hashcove Limited in January.
Looking at its self-description on the Nasdaq website is also confusing: "We are a holding company operating through our wholly-owned subsidiary, LIBB. We are engaged in the production and distribution of premium Non-Alcoholic Ready-to-Drink...iced tea in the beverage industry."
The reality appears to have been a corporate restructuring; according to its website, it continues to produce iced tea drinks through a subsidiary called Long Island Brand Beverages.
From tea to cryptocurrency mining, to blockchain, to loyalty cards
Yesterday, the company formed a new subsidiary called Stran Loyalty Group. According to Long Island Business News, this company will focus on loyalty, incentive, reward and gift cards for corporate brands. It also got itself a new CEO in the form of Andy Shape (pun intended).
In a statement, Shape confirmed the results of the company's blockchain ambitions: “At this time...the company has not taken any steps toward developing any such technology and does not employ personnel with the relevant technology expertise.”
The US regulator began devoting more time to investigating purported cryptocurrency companies in March as a response to millions of dollars being scammed away from the public by entities taking advantage of the cryptocurrency hype. For example, no fewer than 32 illicit operations have been halted in Texas alone.
It seems that Long Blockchain has finally caught the watchdog's eye. The firm said that it is "fully cooperating with the SEC’s investigation,” according to Bloomberg.
Speaking to Long Island Business News, Shape said that the firm's new entity is interested in applying distributed ledger technology to the loyalty industry. This writer will not be holding his breath.
