Nasdaq Moves to Complete Long Blockchain Delisting

Nasdaq announced on June 5, 2018, that it would delist the common stock of Long Blockchain Corp., advancing the formal removal of a company that had become one of the most conspicuous examples of the public-market enthusiasm surrounding blockchain technology.

The decision did not begin a new trading halt. Long Blockchain’s shares had already been suspended from Nasdaq at the opening of business on April 12, 2018. The June 5 announcement instead marked the next procedural step: Nasdaq said it would file Form 25 with the Securities and Exchange Commission to complete the delisting, which would become effective ten days after the filing.

That distinction matters. The June 5 development was the formal conclusion of an exchange-listing process, not an SEC enforcement judgment, a bankruptcy filing or a determination about blockchain technology generally.

From beverages to blockchain

Long Blockchain had operated as Long Island Iced Tea Corp. before amending its corporate name on December 21, 2017. In its annual report, the company said that until December 2017 it had focused exclusively on ready-to-drink beverages. It then announced plans to explore and invest in opportunities involving blockchain technology and changed its Nasdaq ticker from LTEA to LBCC.

The company’s own filing showed how preliminary that transformation remained. Its stated strategy centered on exploring investments and acquisitions rather than reporting an established blockchain operating business. The episode therefore became a test of how conventional securities-market controls would respond when an existing public issuer adopted cryptocurrency-related positioning during an intense period of investor interest.

The listing process

According to Long Blockchain’s SEC-filed annual report, Nasdaq’s Listing Qualifications Department notified the company on February 15, 2018, that it had decided to delist the securities under Nasdaq Listing Rule 5101, which gives the exchange discretionary authority over listing suitability.

The company reported that Nasdaq believed a series of public statements had been designed to mislead investors and capitalize on interest in bitcoin and blockchain technology. That language represents Long Blockchain’s account of Nasdaq’s notification; the June 5 Nasdaq announcement itself did not restate a detailed factual case or make a finding of securities fraud.

Long Blockchain appealed the determination, and a hearing took place on March 22. On April 10, the Nasdaq Hearings Panel upheld the staff decision. Trading was suspended on April 12, leaving the June 5 Form 25 announcement as the mechanism for completing removal from the exchange.

Why the decision mattered

The event drew significance from the gap between a corporate label and a demonstrated operating transition. During the cryptocurrency boom, blockchain terminology had become capable of attracting public-market attention even when an issuer’s historical business lay elsewhere. Nasdaq’s action showed that an exchange could treat the substance and presentation of such a pivot as a listing-suitability issue rather than waiting for a separate enforcement case.

The decision should not be interpreted as a rejection of cryptocurrency companies as a category. Nasdaq’s notice concerned one issuer and arose under its listing rules. Nor did delisting extinguish the company’s shares; Long Blockchain had previously said it expected trading to move to an over-the-counter venue, where investor protections, liquidity and quotation conditions could differ from Nasdaq.

No event-day Nasdaq price move can be calculated because LBCC had not traded on Nasdaq since April 12. Accordingly, this reconstruction makes no claim about a June 5 return, volume response or cryptocurrency-market reaction. Its importance was institutional: an exchange was completing the removal of a company whose rebranding had come to symbolize the speculative intersection of public equities and the blockchain boom.