Long Island ‘blockchain’ investors charged in insider-trading scheme
“The SEC remains committed to preventing all types of fraudulent conduct in connection with purported ‘crypto’ companies, including profiting from trading on material nonpublic information,” said Richard Best, director of the SEC’s New York office.
No attorneys for the defendants could be located.
The Long Blockchain case recalls the time four years ago when Bitcoin suddenly changed from a chew-toy for financial nerds, libertarians and computer geeks into an object of mass hysteria. A Hooters restaurant owner offered cryptocurrency to customers for munching on burgers (presumably paid for with fiat currency). Eastman Kodak’s stock doubled after announcing it had launched a digital coin.
Long Island Iced Tea, based in Farmingdale on Long Island, hopped on the gravy train because almost nobody was buying its soft drinks. Its stock price soared by nearly 400% when it declared in December 2017 that it was pivoting to blockchain, the technology underpinning Bitcoin.
Before disseminating the news of a “once-in-a-generation opportunity” that led the company to “shifting its primary corporate focus toward the exploration of and investment in opportunities that leverage the benefits of blockchain technology,” Watson, a New Zealand citizen who controlled 30% of Long Island Iced Tea’s stock, shared a copy of the announcement with Lindsay. Lindsay then alerted Giguiere, who bought 35,000 shares and sold them two hours later. Some 15 million Long Blockchain shares changed hands in a single day on Nasdaq, 120 times more than average.
Giguiere seems to have had an inkling that the feds were watching. He warned Lindsay and an associate that they needed to be “mindful” promoting Long Blockchain’s revival because “the regulators are scrutinizing Block an[d] Crypto deals that are being promoted right now.”
When an associate protested he hadn’t been tipped off before Long Blockchain took off, Lindsay replied: “I think I told everyone.”