Squirrley Name Change to Include ‘Blockchain’ May Cost Company Its Prized NASDAQ Listing
Long Blockchain faces being delisted by Nasdaq over rebranding itself as a Blockchain player, which is increasingly being seen as a farce to dupe investors.
Back in December, the team behind Long Island Iced Tea thought it was a great idea to change the company’s name to Long Blockchain.
Now, less than three months later, the publicly-traded company is finding that the name change may cost it far more than any spoils it could have reaped from being affiliated with the hot crypto space.
Its rebranding moves aren’t passing the sniff test with Nasdaq, which served it with a notification letter that it will be delisted from its exchange.
Let’s go over this company and the conundrum it’ found itself in.
Blockchain craze bandwagon
Last year, the price of the crypto space’s darling, Bitcoin, soared, nearing its all-time high of $20,000 in December. The crypto fervor was everywhere, so much so that the rise was prompting companies to change their names to reflect their moves into the space.
In December, Long Island Iced Tea’s execs decided to get on the crypto bandwagon with the name change. When it announced the change, the company’s stock price immediately spiked to the tune of 200% in just one day. On that day, more than 15 million shares changed hands. That compared to its average daily volume of roughly 170,000 shares.
Long Blockchain’s stock surged to a 52-week high of $9.49 before closing at $6.91. The following day it slumped to $2.44. At the time of writing, its price was $2.85.
Here’s a one-year chart on its trading history.
When the bandwagon crashes
However, the rebranding to appear as a Blockchain-focused company has woefully backfired.
Bitcoin’s price slid horrifically from the near $20,000 high, prompting the enthusiasm for it and the space to wane. At the same time, regulators were sounding the warning bells about crypto-related stocks.
While financial regulators may be slow to adopt rules for the growing crypto space, stock exchanges are extremely rigid when it comes to who they approve to be listed on them.
When Nasdaq officials reviewed Long Blockchain, whose ticker is LBCC, they found enough issues to promptbthe delisting decision. On Feb. 15, Long Blockchain received the notification letter about the delisting that stated it had attempted to:
“take advantage of general investor interest in bitcoin and blockchain technology.”
Nasdaq charges that Long Blockchain made a series of public statements designed to “mislead investors, raising concerns about the company’s suitability for exchange listing.”
One of the public statements relates to the company claiming it was buying Bitcoin miners. We told you that in January it announced it would acquire 1,000 Bitcoin miners produced by China’s Bitmain, the largest manufacturer of Bitcoin mining equipment.
A few weeks later, we reported those acquisition plans were off the table. In a statement, Long Blockchain said:
“After thoughtful consideration and in consultation with outside technology advisors, the Company will instead focus its efforts on seeking to enter into and ultimately consummate its previously announced proposed merger with Stater Blockchain Limited (“Stater”), a technology company focused on developing and deploying globally scalable blockchain technology solutions across the financial markets, and exploring additional opportunities and strategic investments across the ancillary blockchain ecosystem.”
But we’re a legitimate Blockchain company
Long Blockchain officials are adamant that they are not trying to scam anyone. Now the onus is on them to prove it to avoid the delisting. It is appealing the delisting decision, so its stock can still be traded.
In response to the delisting notice, Long Blockchain had this to say:
“The Company strongly disagrees with the [Nasdaq’s] determination and, accordingly, has appealed to a Hearings Panel.”
Long Blockchain acknowledged through its response to the delisting notice that it understood what it needed to do to show it’s in compliance with Nasdaq’s listing rules.
“…the market value of the Company’s listed securities must remain at $35 million or more for a minimum of ten consecutive business days (Nasdaq has the discretion to monitor compliance for as long as 20 consecutive business days before deeming the Company in compliance).”
We’ll keep you posted!
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