At the time, the episode underscored the exaggerated hype surrounding the crypto space. Now regulators say the name change was at the heart of an illegal insider trading scheme.
The SEC said Barret-Lindsay, a Canadian citizen who owned a company founded in the Cayman Islands, then shared the material non-public information with a friend named Gannon Giguiere, who owned and operated a stock-promoting website.
“Within hours of receiving this confidential information, Giguiere purchased 35,000 shares of the Long Blockchain stock,”
The next day, December 21, 2017, Long Island Iced Tea Corp. announced. until this point, exclusively a soft drink maker made its makeover and described the focal point of the blockchain as a “once in a generation opportunity.”
Although the company had no real business tied to the blockchain at the time and no experience in the cryptocurrency field, the Nasdaq-listed stock price skyrocketed and trading volume increased by 1,000%.
“Within two hours of the announcement, Giguiere sold his shares for over $ 160,000 in illegal profits,” the SEC said.
Confidential source and encrypted message
The agency accused all three of insider trading.
The complaint indicates that the SEC is seeking permanent injunctions and civil sanctions against all three. The SEC also wants to prevent Watson, a New Zealand citizen who controlled 30% of Long Island Iced Tea Corp.’s shares, from serving as an officer and director of any public company.
“The SEC remains committed to preventing all forms of fraudulent conduct by alleged ‘crypto companies,’ including profiting from non-public information trading,” Richard Best, director of the SEC’s New York Regional Office, said in a statement.
Neither the company nor the three accused were available for comment Saturday.
The SEC complaint cited messages sent on an unnamed encrypted messaging app as well as communications with “Individual A”, which allegedly participated in stock promotion schemes with Lindsay and Giguiere. The agency said “Individual A” served as a confidential source of law enforcement.