(Bloomberg) — A surprise name change that sent an iced-tea company’s stock soaring during the 2017 crypto craze wasn’t a surprise to everyone.
The Securities and Exchange Commission has sued three individuals, including one who allegedly traded ahead of Long Island Ice Tea Corp.’s rebranding to Long Blockchain Corp., according to a statement Friday. Eric Watson, an undisclosed control person of the company, drove the business change and tipped off his friend and broker, Oliver Barret-Lindsay. Barret-Lindsay then told his pal, Gannon Giguiere, who made more than $160,000 in illegal profits, the SEC said.
Long Blockchain jumped more than 380% intraday in December 2017 after the company issued a press release announcing its new name.
“The SEC remains committed to preventing all types of fraudulent conduct in connection with purported ‘crypto’ companies, including profiting from trading on material non-public information,” Richard R. Best, head of the SEC’s New York office, said in the statement.
Long Blockchain was among a number of obscure micro-cap companies that embraced 2017’s massive Bitcoin rally by announcing new business ventures focused on cryptocurrencies. They were rewarded with huge gains in their share prices, and scrutiny from regulators as to whether the descriptions were legitimate. Long Blockchain’s stock was delisted by the SEC in February.
Lawyers representing Barret-Lindsay and Giguiere didn’t immediately respond to requests for comment. Bloomberg News was unable to contact Watson, who is a New Zealand citizen.