Long Island Iced Tea Under Investigation by FBI for Insider Trading During Crypto Mania

After pivoting and switching names to Long Blockchain, the small company boosted its stock price by up to 500%, sparking concerns of manipulated trading.

Long Blockchain, the company that sprung from Long Island Iced Tea, was a success story in 2018, when even the name switch led to its stocks appreciating by 500% in frenzied trading. But this anomaly did not remain without repercussions. Now, the FBI is deepening the investigation into the internal communication of the firm, seeking evidence of insider trading.

Small-scale OTC companies quickly switched to the hot new moniker, and stocks went through spectacular pumps, mimicking the crypto coin market. It’s difficult to unearth evidence about stock pumps, but this time, the FBI suspects there may be messages pointing to a concerted pump.

One of the parties identified Eric W, most probably Eric Watson, who is a large-scale investor in Long Blockchain, from just before the company pivoted. The FBI will seek access to determine if some of the communication was used to trigger a stock market pump-and-dump scheme. Julian Davidson is another name mentioned in relation to the investigation, most probably the company’s director from before the pivot.

The firm changed its identity in December 2017, which was a period of peaking mainstream interest in Bitcoin (BTC). The overall hype surrounding digital coins only helped the case for Long Blockchain - but now, there may be evidence of a concerted effort to boost the stock price.

The usage of “blockchain” for mainstream financial products was so pervasive, that the US Securities and Exchange Commission (SEC) banned the usage in generating names for exchange-traded funds (ETF). Long Blockchain (LTEA) is also undergoing investigation by the SEC. LTEA never issued an actual blockchain asset, a coin or a token, and only relied on its stocks for gains.

Currently, there are about 10 small-scale companies reportedly working on blockchain projects. Most are either gray market or pink sheet companies. Of those, the riskiest one is considered to be Blockchain Loyalty, corp. (BBLC), which was given a Caveat Emptor warning.