FBI Probes Iced Tea Turned Blockchain Company For Insider Trading

Crime, News | July 26, 2019 By:

Long Blockchain, the iced-tea company that pivoted to blockchain in 2017, is being investigated by the US Federal Bureau of Investigation (FBI) for evidence of insider trading and securities fraud.

In December 2017, Long Blockchain changed its name from Long Island Iced Tea (LTEA) as part of a corporate shift towards “exploration of and investment in opportunities that leverage the benefits of blockchain technology.” The company’s share price exploded by over 400% in a single day, following the name change. Since then, the company has been delisted from Nasdaq due to suspicions that the name change was made to boost its stock. It was also subpoenaed by US financial regulators.

According to a search warrant request, first reported by Quartz, the FBI is seeking for evidence of insider trading and securities fraud connected to the stock of Long Blockchain. The FBI wants to gain access to encrypted messages held on a smartphone that was seized in a securities fraud case at another firm called Kelvin Medical. The FBI suspects that two people, Oliver Lindsay and Gannon Giguiere, who were arrested in that ongoing case, were engaged in insider trading of Long Blockchain.

The FBI warrant states that after Lindsay and Giguiere’s arrests in July 2018, FBI agents were able to hack into Lindsay’s iPhone and extract months of text message conversations. The encrypted messages exchanged by Lindsay and other individuals reportedly contain evidence of discussion of “what appears to be confidential information regarding LTEA.” The encrypted messages also include conversations with a wealthy New Zealander named Eric Watson. The FBI also believes that Long Blockchain stock was the target of a so-called “pump-and-dump” scheme.

The FBI also said in its search warrant that Lindsay sent a number of WhatsApp messages to a person identified on his phone as Julian Davidson, who became Long Island Iced Tea’s executive chairman in 2016. The warrant also alleged Lindsay sent documentation of a $681,625 wire transfer between an asset management company and Long Island Brand Beverages to a person named Julian Davidson. According to the FBI, this and other evidence provides context for an insider-trading conspiracy, and identifies other possible conspirators.