Blockchain-Based Tea Makers Receive Subpoena from the SEC

Long Island Iced Tea

Ever since the blockchain phenomena has gained traction as a breakthrough technology, many large organizations have made the switch to the technology in hopes of reaping the many potential benefits. It is not uncommon to find a certain organization, which already established itself in a particular industry, make the switch to integrate blockchain technology into its ranks.

One such recent example is the New York-based beverage company Long Island Iced Tea. The company made the switch, rebranding itself as the Long Blockchain Company last December. The move seemed a success at first, with the company’s stock jumping nearly 500% after the announcement was made. However, just like many ICOs in recent memory, also ran into legal troubles. Recently the U.S. Securities and Exchange Commission (SEC) began investigating the company and Long Blockchain Company received a subpoena from the agency.

In the middle of 2017, the company decided to change their vision, focusing more on investment opportunities using blockchain technology. The company’s decision-taking has put many investors in a tough spot, with the company originally announcing intentions to purchase mining equipment for establishing a bitcoin mining operation. The plan, canceled soon after, negatively hit the company’s stock price. In context, the firm, which was valued at $70 Million in 2017, is now worth less than $5 Million.

Troubles continued to plague the company when NASDAQ delisted them from the exchange. Even more, the sudden change of plans to rebrand into a blockchain based entity was seen as a red flag by some regulators as well as exchange officials, putting regulatory agencies on high alert.

SEC subpoenas Long Island Iced Tea
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Image credit: Long Island Iced Tea

Long Island v SEC

Matters became more complicated when the SEC issued the subpoena. While full details of the legal battle are still not revealed, it is believed that the company received the subpoena on July 10th originally. They received instruction to submit certain documents from the organization for scrutiny. According to an official press release from the company, the company did not anticipate the incursion by the SEC, but is doing everything in its power to be fully compliant. “The company cannot predict or determine whether any proceeding may be instituted by the SEC in connection with the subpoena or the outcome of any proceeding that may be instituted.”

As mentioned before, not much is known about the SEC’s recent actions and the response from the Long Blockchain group. Even though they are engaged in an ongoing legal battle, the Long Blockchain Group has experienced some noticeable changes. For instance, Long Blockchain has already moved into loyalty programs, creating a new subsidiary called the Stran Loyalty Group. The main aim of this project according to the team is to “implement disruptive technology solutions, including distributed ledger technology.”

The company has experienced some organisational changes as well, with Stran Promotional Solutions founder Andy Shape being appointed as the new chairman of the Long Blockchain venture. As it stands though, the Long Blockchain Debacle is still raging on, with some commenting on the lack of stricter rules for ICOs while others believe that the SEC’s stance is unjustified. Whatever the case may be, the Long Blockchain debacle just adds to the growing list of ICOs and blockchain projects, facing trouble from U.S. regulators.

Kaustav Das
Kaustav Das
Kaustav Das is a staff writer for Block Telegraph. He has been a tech journalist since 2016 and covers blockchain and cryptocurrency related topics on a daily basis.

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