The United States Federal Bureau of Investigation (FBI) is looking into former iced tea and lemonade manufacturing company, Long Island Iced Tea’s (LTEA) switch to Blockchain. The FBI is reportedly looking to uncover evidence of insider trading and securities fraud, and has requested access to Whatsapp messages exchanged with the firm for more information.
Per a search warrant request revealed by business news outlet Quartz on Thursday, the FBI is planning to extend a warrant from a different case to gain access to communications with the former beverage company. These messages allegedly include evidence that LTEA was involved in a trading scam.
The FBI revealed their intention to access some encrypted messages contained on a smartphone that was confiscated from a different securities fraud case at a firm called Kelvin Medical. Per the details of the warrant, two people arrested in the Kelvin Medical case, Oliver Lindsay and Gannon Giguiere, are suspected to be involved with Long Island Tea.
The new warrant stated that the FBI has cause to believe that the encrypted messages to and from Lindsay contain evidence of discussions of “what appears to be confidential information regarding LTEA.”
From Beverage To Blockchain
When Long Island Iced Tea, announced its decision to shift into Blockchain in late 2017, it seemed like a fresh enough grass to grace story. After all, the firm was rocking pretty turbulent waves with its beverage business. The business was facing delisting from the Nasdaq Stock Market due to low market capitalization, and they wanted to stay listed at all costs. Life may have been throwing them lemons, and Long Island made lemonade all right, but lemonade couldn’t keep them afloat.
To make the most of the bitcoin trading hype at the time, the firm rebranded to Long Blockchain in early 2018, subsequently seeing a 289 percent spike in stock trading. The company’s genius plan was to continue selling nonalcoholic beverages through a subsidiary called Long Island Brand Beverages, LLC, but also aspire toward “the exploration of and investment in opportunities that leverage the benefits of blockchain technology.”
It seemed to have worked. According to a Techcrunch report, as of Dec. 20, the firm had a market value of just $23.8 million — but, at one point in premarket trading, had 9.76 million outstanding shares, giving Long Blockchain Corp. a market value of close to $138 million.
However, Long Blockchain Corp. only seemed to be capitalizing on the benefits of a blockchain appellation, as they could not successfully provide a commercialized distributed ledger or blockchain technology. In January 2018, SEC Chairman Jay Clayton addressed the crypto craze of companies adding “blockchain” to their names without actually providing any DLT services, warning that they would face increased scrutiny from regulators.
The move spurred Long Blockchain to launch plans to purchase 1,000 Antminer S9 mining rigs for $4,2 million, to commence mining operations for a digital currency that was to be named LBCC. Soon after, on Jan. 16, Long Blockchain Corp. announced its intent to form a wholly-owned subsidiary that would merge with a United Kingdom-based tech company Stater Blockchain, which was developing “globally scalable blockchain technology solutions in the financial markets.” Thomas described the plan as a “potential milestone.”
When it became evident to Nasdaq that Long Blockchain was all talk and no action, they went ahead and delisted the firm. The SEC served Long Blockchain a subpoena right after, and that was the last straw for LBC. The company soon announced that it was selling its ready-to-drink tea business to Canadian investment firm ECC Ventures 2 Corp.