Back then, the episode highlighted the excessive hype surrounding the crypto space. Now regulators say the name change was the focus of an illegal insider trading system.

Eric Watson, the major shareholder of Long Island Iced Tea, gave a friend and realtor, Oliver Barret-Lindsay, a hint of the impending name change by sharing a draft of the company’s press release, according to a complaint filed by the SEC in the U.S. District Court for the South District of New York.

The SEC said that Barret-Lindsay, a Canadian citizen who owned a Cayman Islands registered company, then shared this material non-public information with a friend named Gannon Giguiere, who owned and operated a stock advertising website.

“Within hours of receiving this confidential information, Giguiere bought 35,000 shares of Long Blockchain,” said the SEC.

The next day, December 21, 2017, Long Island Iced Tea Corp., until then exclusively a manufacturer of soft drinks, announced its revision and described the entry into the blockchain as “once in a generation opportunity”.

Although the company had no actual blockchain business or experience in the cryptocurrency space at the time, the Nasdaq-listed share price soared and trading volume increased 1,000%.

“Within two hours of the announcement, Giguiere sold its shares for over $ 160,000 in illicit profits,” the SEC said.

Confidential source and encrypted messages

The agency accused all three of insider trading.

The complaint suggests that the SEC is pursuing injunctions and civil sanctions against all three. The SEC also wants Watson, a New Zealand national, who owns 30% of the shares in Long Island Iced Tea Corp. controlled from serving as an officer and director of a public company.

“The SEC remains committed to preventing all forms of fraudulent conduct in connection with alleged ‘crypto’ companies, including profits from trading in material non-public information,” said Richard Best, director of the SEC’s New York regional office. in a statement.

Neither the company nor the three defendants were available for comment on Saturday.

The SEC complaint cited messages sent through an unnamed encrypted messaging app as well as communications with “Person A” who allegedly participated in stock action programs with Lindsay and Giguiere. The agency said “Person A” was acting as a confidential source for law enforcement agencies.

Both Barret-Lindsay and Giguiere were previously charged by the SEC with participating in a “pump-and-dump” program. This case is currently in litigation. The SEC said Long Blockchain was removed from the Nasdaq in February for allegedly making a “series of public statements aimed at misleading investors and exploiting general investor interest in Bitcoin and blockchain technology.”


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