Company Piggybacking on the Name Blockchain Abandons Crypto-Related Plans
Changing its name to Long Blockchain from Long Island Iced Tea may not have helped this company.
One of the companies that changed its name to include the word Blockchain has dropped lofty plans to appear to be a legitimate crypto-related company, just as the price of Bitcoin has dropped.
In early January, before Bitcoin’s considerable price slide, we told you about Long Blockchain announcing it had agreed to purchase 1,000 Bitcoin miners produced by industry leader Bitmain.
Well, Friday, the company, whose original name was Long Island Iced Tea, issued a statement saying that it was abandoning those plans.
After thoughtful consideration and in consultation with outside technology advisors, the Company will instead focus its efforts on seeking to enter into and ultimately consummate its previously announced proposed merger with Stater Blockchain Limited (“Stater”), a technology company focused on developing and deploying globally scalable blockchain technology solutions across the financial markets, and exploring additional opportunities and strategic investments across the ancillary blockchain ecosystem.
Shamyl Malik, head of the company’s Blockchain Strategy Committee, said:
“While we continue to believe in the value of mining equipment to the blockchain ecosystem, the purchase of these machines - which was negotiated as a no-risk option to the Company - was just one of the multiple strategic avenues we have been considering.
Malik went on to say that the company will continue to evaluate the purchase of mining equipment for Bitcoin and other digital currencies as part of our larger blockchain initiative, which includes among other potential transactions the proposed merger with Stater.
Long Blockchain’s story made headlines because the simple tweak of its name to include the word Blockchain caused its stock skyrocket more than 500%.
Without the mining buy, Long Blockchain will continue to be what it was before the name change – a beverage maker.
Other companies have made similar moves, such as biotech company Bioptix, which changed its name Riot Blockchain. It also saw its stock move higher on the name change.
Regulators have warned that company name changes to include anything related to the hot crypto space should be scrutinized by investors before they give them a dime.
Long Blockchain is an example of what people should be watchful for, according to financial regulator FINRA. It notes that investors should be wary of stocks with huge spikes in price because this could signal potential manipulation or fraud.
The space will likely continue to see companies rebranding themselves to include crypto-related names, which is why due diligence is imperative.
In a statement, FINRA said:
Especially in today’s “hot” cryptocurrency environment, it’s easy for companies or their promoters to make glorified claims about new products, services and other cryptocurrency-related connections. And, even when legitimate companies flock to a hot, new sector, fraudsters almost always follow suit, exploiting the news to launch their latest frauds du jour. Follow these tips to avoid costly mistakes.