Long Blockchain Corporation, the former Long Island Iced-tea Company whose sudden pivot to crypto captured Wall Street’s attention during the 2017 bull run had its shares delisted by the US Securities and Exchange Commission (SEC) on Monday after failing to comply with filing financial documents.
Long Blockchain was among obscure micro-cap companies that embraced a massive rally for Bitcoin in 2017 to rebrand themselves as focusing on digital tokens. They were rewarded with huge jumps in their share prices, and scrutiny from regulators as to whether the new business descriptions were legitimate.
Main reason for delisting Long Blockchain
The SEC officially pulled the Farmingdale, New York-based company’s registration Monday, citing the “protection of investors” and Long Blockchain’s failure to file annual reports since one covering calendar 2017 and quarterly reports since the one for the period ended Sept. 30, 2018.
Further, SEC mentioned that, “Despite the Farmingdale company’s name change in December 2017, it’s blockchain business never became operational'”.
In its order, the SEC said Long Blockchain’s shift from making soft drinks to blockchain technology never materialized. The company agreed to have its share registration revoked without admitting or denying the SEC’s findings.
What leads to delisting of Long Blockchain?
When Long Blockchain was rebranded itself, they conducted that without explaining exactly how it would embrace blockchain technology or move away from summertime beverages. They merely followed the trend, thinking there will be market opportunities by getting into crypto sector.
Since the time they changed their name and moved into cryptocurrencies, the company has gone through several CEOs and announced a variety of unrealized strategies related to cryptocurrencies, including a plan to buy specialized computers that “mine” bitcoin, the most widely known cryptocurrency.
A subsequent effort to buy bitcoin miners was abandoned in less than a month, setting the stage for Nasdaq to nix trading and relegating LBCC to the over-the-counter markets. In June 2018, the company’s stock was moved to over-the-counter trading after being delisted by the Nasdaq Stock Market with the allegations of ‘misleading investors’.
What will be the future of Long Blockchain?
A year ago, privately held Stran & Company Inc. called off a plan to merge with Long Blockchain because the companies would be “unable to satisfy all necessary closing conditions” within a reasonable amount of time.
The nonbinding merger deal called for Long Blockchain to take a new name reflecting its new focus on promotional products. Financial terms of that deal were not yet disclosed.
Long Blockchain continues to operate its beverage subsidiary, now known as Long Island Brand Beverages. Long Blockchain agreed to sell the ready-to-drink beverage unit to ECC Ventures 2 Corp., based in Vancouver, British Columbia, but that deal has yet to close.
Message delivered by delisting of Long Blockchain
With this incident, companies will need to understand that always going along the trend will not work for them and that will even put the company in risk. Therefore, before moving into a sophisticated sector such as cryptocurrencies it is crucial to conduct a market analysis and significant amount of strategic planning. If not, the fate of Long Blockchain can be achieved in no time.
