I’m just kidding, but others are not, and people are falling for it.
I’m just kidding, I didn’t rename my WOLF STREET media mogul empire “Wolf Blockchain,” and since I’m the only stockholder, what surge the stock undertook since the imaginary renaming went unnoticed, and I didn’t sell any shares either – but others are not kidding, and people are falling for it.
Today, a company that sells ready-to-drink soft drinks, Long Island Iced Tea Corp, but had changed its name on December 21 to the evocative Long Blockchain Corp, and whose shares skyrocketed 350% over the three-day period around the announcement, from $2.08 to an intraday high of $9.49, announced today that it would sell 1,603,294 shares in a secondary offering at a price of $5.25 per share.
If the offering succeeds, the net proceeds after underwriting discounts and expenses will be about $7.74 million to the tiny soft-drink maker with a new plan.
It also changed its ticker symbol from LTEA to LBCC. Today, upon the announcement of the stock sale, and on the first day of trading under the new ticker, shares plunged 21% to $5.04.
See, the old plan wasn’t working very well. The company had sharply increasing sales that generated much faster increasing losses, losses that have ballooned to triple the amount of its revenues — which is deadly, over time. This chart shows annual sales and net losses through 2016 and the first three quarters of 2017:
On December 21, when the company changed its name to Long Blockchain, it said in the SEC filing that “it was shifting its primary corporate focus towards the exploration of and investment in opportunities that leverage the benefits of blockchain technology.”
The company disclosed that it had entered into a “Loan and Option Agreement” with Court Cavendish Ltd. under which it could borrow $2 million, with an option to double this amount to $4 million. In addition to a facility fee of $100,000 paid at execution, the company would also pay the interest on the loan, and additional fees on the extension amount.
And here is the good part:
The Company also issued to the Lender three-year warrants to purchase 100,000 shares of Common Stock of the Company exercisable at $3.00 per share and agreed to issue to the Lender warrants to purchase an additional 50,000 shares on the same terms for each $1,000,000 drawn on the Extension Amount.
Court Cavendish has the option at any time to convert any outstanding principal and interest into shares “at the lower of (i) $3.00 per share and (ii) the closing price per share on the date of the conversion, but in no event at a price less than $2.00 per share.” And it has the right to appoint two members to the Company’s board.
December 26, Long Blockchain announced that Court Cavendish had converted the initial draw-down of the loan – $750,000 – plus interest into shares at the exercise price of $3.00 a share, so 250,233 shares. They were worth about $1.25 million at the time. Not bad for five days.
OK, moving at lightning speed over the holidays. On January 1, the board of LBCC appointed two directors, nominated by Court Cavendish: Shamyl Malik, “who is the Global Head of Trading at Voltaire Capital, and Som Ghosh, a technology entrepreneur with experience in blockchain technology.”
On January 4, LBCC announced that it has a entered into a purchase agreement with “several” vendors to acquire 1,000 “mining rigs” and power supplies — to be “used to mine bitcoin, bitcoin cash and any other coin using SHA256 algorithm” — for $4.2 million, payable in 260,000 shares and $2.9 million in cash, to be raised via the stock offering announced today.
The sellers have agreed to hang on to the shares for 90 days after the completion of the sale of the equipment. But if the stock closes at $15 a share or more for 15 trading days in a row, they’re free to dump their shares.
In one of the several press releases today, LBCC added:
The mining equipment will be installed in a world-class third-party data center experienced in cryptocurrency mining and located in a Nordic country. Long Blockchain expects to benefit from an established infrastructure and competitive energy costs using geothermal and hydro-electric power sources.
“The commencement of our mining operations places us on a path to generating blockchain-related revenue through the accumulation of bitcoin,” CEO Philip Thomas said in the statement.
Let’s adds this up. Court Cavendish got 250,233 shares. The vendors are getting 260,000 shares. And the company will sell another 1,603,294 shares, in total 2,113,527 shares, to become a bitcoin miner in a Nordic country with hopefully excess electricity.
And who gets the fees and commissions? Alexander Capital, L.P., the placement agent for the stock offering, will get nearly $600,000. The stock offering is expected to close on January 9.
So that was fast: From December 21 to January 9, and over the holidays. Going forward:
[The soft-drink maker] is focused on developing and investing in globally scalable blockchain technology solutions. It is dedicated to becoming a significant participant in the evolution of blockchain technology that creates long term value for its shareholders and the global community by investing in and developing businesses that are “on-chain.”Blockchain technology is fundamentally changing the way people and businesses transact, and the Company will strive to be at the forefront of this dynamic industry, actively pursuing opportunities.
Meanwhile, until blockchain is “fundamentally changing” anything other than company names and ticker symbols, the company’s subsidiary, Long Island Brand Beverages, LLC, will continue to sell the original ready-to-drink soft drinks.
But LBCC is just one of many tiny outfits adding “blockchain” to their names for instant fame and financial success. This can happen only during the late stage of an extraordinary bubble. Read… I’m in Awe of How Far the Scams & Stupidities around “Blockchain Stocks” are Going
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That headline! this is the funniest thing I’ve read all week.
Thank you, Wolf for your honest and insightful writing.
Crypto Coins –
A Pumper Dumper’s Dream.
Me thinks you be spot on!
These ‘FLASH CRASHES’ look like Combines Reaping The Wheat… ; ]
I thought, that once again, I missed this once-in-a-lifetime opportunity – until I realized it was a joke. At least my pulse is down, and can sleep better, now.
Whatever man, I’m still buying shares.
All. In. Baby..
Darn it, you’re ruining my dastardly plan to buy a junkyard that’s filled with discarded cinder blocks and rusted tire chains and rename it from Fred Sanford’s junkyard to Sanford Blockchain Solutions. I was going to take it public with a business plan that uses blockchain technology to systemize and account for recycled construction materials. It was going to make me tens of millions of dollars in the IPO, but I may as well just play the lottery now.
You realise that’s actually a thing. Blockchain enabled circular economy. The eu is big on reducing waste and well a distributed ledger is perfect for that.
Since Bitcoin is really a Ponzi-scam anyway — some people, and not just me — think think that.
WHY NOT THIS ?
Indeed. We are the Ponzi country, with various state and local pension schemes, and Federal Old-Age insurance schemes that will fail badly . . . well before the last-in participants collect one dime.
America the Ponzi Country. Amen
Because Bitcoin isn’t a Ponzi scheme.
Just ask the guy that started Litecoin who cashed out all his holdings at an all time high so he wouldn’t have a conflict of interest promoting it.
I worked for one of the paid news services (press releases) from 1991-2013. In the go-go internet days prior to and including the dot-com era, it was a common thing for companies to rename themselves and add ‘.com’ after their name. Most companies don’t use this naming convention now, but it was common-place in the 90s. They issued press releases left and right, “xxx-company launches new website, rebrands itself as xxx-company.com.” Valuations soared and VC $$$ poured into them. But as we know, it all came crashing back down. Blockchain currencies and the renaming to include ‘block-chain’ feels an awful like those go-go days; but today I think we are only starting to see the institutions join the game. I may be wrong there. Still, capitulation by the institutions may be the close to the final leg in the endgame of this bubble.
This was what I was going to post too but you said it very well – around ’99 or so all those companies were adding .com to their names and putting out spam news releases every day like crazy and the stock rising crazy too.
Same stuff with this Blockchain, these will fall apart too as millions of hackers crack the algorithms and security that make things happen and flood the market with even more counterfeit currency – LOL
“The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren’t much more than potfueled ideas scrawled on napkins by uptoolate bongsmokers were taken public via IPOs, hyped in the media and sold to the public for mega-millions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.”
— By Matt Taibbi, April 5, 2010, Rolling Stone Magazine
WiredWilliam – Of course you know “it all came crashing down” meant, for the workers, they came to work one day and the door was locked, etc. But for the scamsters, the owners of the scam, it was great. They took off for Switzerland or someplace with millions.
Never forget that.
I even saw this locally. A dot-com called “techshop”, think of a gym, but for people who like to make things. For $150 a month, you had access to all kinds of tools, laser cutters, 3D printers, etc. It was looking like a good enough deal that I was tempted to join. Of course one day not long ago they suddenly shut their doors, so employees lost their jobs, and people who’d paid for membership – and some paid for a year at a time – lost their money. Millions went mysteriously missing. It was bad for many people, but the few running the scam got away with millions. A Ponzi country indeed!
Why dont you publish an ongoing list of all the companies changing
their name to blockchain.
Call it the “Name of Shame List”. Call out these frauds.
Good idea. I already have a bunch on my list. There should be more in the next few weeks. Then it should make a fun list.
Wonder if anyone will offer Tulip Blockchain as a name. That would have to be the ultimate sarcasm.
No need, really. There already is one PonziCoin and one PonzICO:
https://ponzico.win/
(I would dare to label it performance art instead of just sarcasm)
The company would do very well. Great pump and dump. Most “investors” these days know nothing about the Tulip Mania. In fact, Tulip Mania Blockchain, Inc would be a great name.
I’ll bet that TulipManiaBlockchainRipoffPonzi, Inc would do well.
Tulip Blockchain is a great idea. Ricardo you might be on to something! The hilarious thing about crypto currencies is that even though they max out in vertical growth like bitcoin at 21 million … there is no limit in horizontal growth with competing cryptos … so the tulip reference absolutely makes perfect sense. Eventually someone figures out they are just flowers …
Believe it or not, blockchaintulips.com is already a registered domain name. Either someone is having some fun, or a greenhouse that formerly specialized in tulips has hired an IT specialist and rebranded itself as a blockchain operation, blissfully unaware of the irony.
But blockchaintulips.ca is still available if you’re interested in a Canadian domain extension. $4.99 and it’s yours. Of course .ca does not carry the same irony. Nobody called it the dot.ca bubble, not even up here.
I saw an advert for this firm… Rentberry who seem to be shoe horning blockchain into the rental market. I tried to workout what they are offering but it is a bit beyond me (despite 18+ years in IT)
As always a great website and nice to see a more realistic take on the world.
What is really interesting is a lot of these that are using blockchain for practical purposes, don’t call it blockchain or crypto. It is a distributed ledger or a network utility file.
“The Madness of Crowds List”
What’s really funny, is that as I read the article, there is an ad in the top corner that says
“Rentberry
Blockchain is the future for the apartment rental industry”
Join ICO”
Let’s play “how many ponzi’s can you count in there?” LOL.
“BERRY tokens will have no functionality or utility outside the Rentberry platform”
“Tokens are not being structured or sold as securities or as any other form of investment product”
“BERRY tokens may be subject to expropriation and/or theft”
And it goes on like this for forty pages.
Have I mentioned the whole thing is incorporated in Gibraltar, well known for her e-gaming friendly legislation? Oh wait, HM Government of Gibraltar prefers the term “Remote Gambling”, which not only sounds better but perfectly describes the situation.
Snap, I noticed the rentberry stuff as well (comment awaiting moderation).
The bizarre bit is I really tried quite hard to read up what they do. All far to clever for me! I’ll have to stick to tracker funds with simple rules.
It is a mad mad world.
The idea behind Rentberry is actually not as terrible as those behind other startups: it’s basically a marketplace for landlords and potential renters to meet and especially haggle, with some extra services thrown in, such as credit and background reports.
The BERRY tokens are supposed to be one way to pay rent through their portal, but they are very clear those wishing to use old and boring US dollars, UK pounds, Chinese yuan etc are more than welcome to sign up. I think you are welcome even if you pay with old Spanish silver dollars.
In short the tokens are nothing more than a gimmick to make some cash on the margins and get free publicity.
It’s also telling that while Rentberry is aimed squarely at the US rental market, with a heavy focus on California, the whole BERRY token thing is incorporated in Gibraltar. despite Rentberry being headquartered in San Francisco.
PS: And I find it kind of funny
I find it kind of sad
The dreams in which I’m dying
Are the best I’ve ever had
I find it hard to tell you
‘Cause I find it hard to take
When people run in circles
It’s a very, very
Mad world
Wolf, Alexander Capital, L.P was the sharpest and most calculating knife slicing the cake. They walked with their 600K, not a bunch of warrants, shares, or virtual tokens.
Dig your WOLFSTREETCOIN here!
More seriously, people is very stupid with their money when wasting it is just a click or two away.
Reminds me of two construction workers I saw at Foxwoods rolling dice. They were still wearing their paint and sheetrock compound covered clothes. Temporarily up, they were making a lot of noise, betting $5000 on every roll. I wonder how long it took to lose it all?
I saw an ad for something like … blockchain house loans? How’s that even supposed to work?
I think we took a very wrong turn when we turned away from 90% silver coins and silver certificates.
There are “stackers” here at WolfStreet. Some of them state so, or perhaps allude to it in their posts, others may not.
The stacker’s catechism includes this as its first rule of conduct, “Never admit to having a stack, or to being a stacker.”
https://www.urbandictionary.com/define.php?term=stacker
///
I was wondering what the trigger will be, the thing that spirals out of control and starts a cascade of madness that will end in an economic disaster…I guess we know now. The speed of these scams could be an indicator of degradation acceleration.
///
Intel corp. CEO just sold 39M$ of stocks, some believe due to the Intel chip glitch issue. I think he is going to high grounds, for one or another reason…
///
Wolf … you cracked me up with this one! Hilarious … Thanks for the laugh … needed one!
You’re missing the whole point.
Here’s what you do.
1) Come up with your own cryptocurrency – Wolfcoins or something else.
2) Dream up a way to mine them, then make a lot of them. Maybe you can gin up a few with your special digitalWolf, which look a lot like a Commodore 64. The trick is getting them off the floppy drive and onto a flash drive. Create a database using Microsoft Access and use it to record blockchain transactions. Put it on the cloud on a free server, then dream up a system so only people with Wolfcoins can update it.
3) Issue lots of new Wolfstreet shares and use the Wolfcoins to buy them, selling the shares to yourself.
4) Give each Wolfcoin a market value of $1000 or more. After all, you’re dealing with yourself and can give them any value.
5) Value Wolfstreet at a few million dollars.
6) Sell the shares privately to a fortunate few at market. Toss is a Wolfcoin as a sweetener. Tell them you’ll create more Wolfcoins as the value of the stock rises.
7) Retire, except to use the digitalWolf to make more Wolfcoins now and then. Sell them, giving stockholders first dibs.
Be just like Japan or the Swiss, or the Eurozone, just on a smaller scale.
That is a really great headline, Wolf. I like it!
Please do keep up this great and informative website – and a Happy New Year to you and yours.
What scares me about this is that it is becoming harder and harder to satirize anything. Given the mild insanities that pass for news in today’s media, it’s only a matter of time until the Onion is our newspaper of record.
Soon in a place near you: just as many different cryptocurrencies as blockchain inflated companies
The headline scanning algos picked up blockchain” and issued a buy order. Name your nascent company carefully regardless of what you purvey.
Quote of the week on Wolfstreet Comments:
“Eventually someone figures out they are just flowers …”
And certainly don’t forget to install and run inconspicuous WolfCoin mining software on the PC of everyone who visits WolfBlockChain.com Gotta maximize revenues ya know!
Oh, damn, I hope I’m not late to the party. I’ll have 10000 WolfCoin Wolf.
So you create a company whose business plan is to buy Bitcoins? Seems okay, and then you make an ETF of that? Then you sell options and futures on the ETF, as well as derivatives.
Like blockchain, much is changing in terms of tech, but not in terms of base behavior. Does anyone know ( ref Hussman artical), that bitcoin is governed by its own technology to 200 transactions per minute, worldwide?
Surprise! Seems faited to doom. Liquidity is a one way street. Fees increasing and still hackable.
Perhaps we should just change the national bird from bald eagle to, cuckoo bird. We seem to be run by brood parasites.
Bitcoin is but not the blockchain. Blastercoin uses less power but still nothing that can scale like say visa can.
Dear Wolf,
The name of the game in the investment world is to place bets. Stackers, traders, speckers, and hedgies, run long or short bets to make money, and fund prospects to make even more money. The name of the game is not to be benevolent where Bears eat, and Bulls eat, but pigs get slaughtered.
Long Blockchain Corp. is merely playing the game as it is supposed to be played, and their long term risk is pretty much nil given that blockchain tech is here to stay, and is not a weak advancement by fly-by-night prospectors. Bottom line is that all the current shareholders will be able to cash their chips in within the first few years of operations. After the tech bottoms out the original investors will be long gone and likely retired from the investment world.
You don’t like short term high volatility bets, and you base your negation of Long Blockchain Corp. on expectations that the whole industry will collapse due to a lack of systemic stability industry wide.
Clearly, before the industry flops entirely there will be a buildup of long term investment that will eventually stabilize the industry to allow for increased investment, and more R&D. Once investors pile in we will know that it will take a certain amount of time for them to head for the exits. Presently, we are nowhere near an industry dip, and the trend, as well as momentum, are clear signs that the growth phase is going to have longevity.
The smart money will bail when the dumb money stops flowing, and the dumb money shows no signs whatsoever of slowing given the stats.
You are wrong about blockchain tech, Wolf.
MOU
“The smart money will bail when the dumb money stops flowing, and the dumb money shows no signs whatsoever of slowing given the stats.”
A financial market dependent on dumb money is inherently not viable in the long run. Forgive me for pointing it out, but you seem to have refuted your own position.
The Wall Street Stock Market currently has the highest nosebleed valuations in the history of stock markets. Clearly, at nosebleed levels we can all safely conclude that Wall Street has been running on dumb money since the Great Depression. Every now and then Wall Street crashes, and with DOW 25,000 currently attained, it should not be long before Wall Street crashes again. Until that day manifests there is more money to be made.
MOU
The tax cut will probably lead to M&A and more stock buybacks giving the stock market some extra fuel for 2018.
“More money to be made”.
Unless, of course, you wake up and the market is down 20% because of a black swan event. We saw a 20% drop on Black Monday, when stocks weren’t as overvalued and algos weren’t so dominant.
A fine explanation of a conventional abuse of technology, and yet, blockchain is far more dangerous in less conventional applications.
In combination with other technologies and techniques it can be exploited to pursue whole categories of scams – ponzis, real estate, money laundering, consumer fraud, payroll fraud, equity fraud, settlements fraud, election fraud – limited only by the imagination of the perpetrator and the time and expertise needed for implementation.
Banks, hedge funds, and other elements of the FIC have recognized the potential, and once they’re up to speed you’ll see the derivatives markets go from a quadrillion to uncountable in no time, reducing global financial systems to a state where a handful of players desperately try to put down the others before they themselves are put down.
Magic is loose in the world and anything is possible.
White magic, or Black?
Or is it just entropic?
Tautologic. It’s all mathematics under the hood. Existence as a fundamental property seems to be dependent on a cosmic design flaw.
Saying “it’s all mathematics under the hood” ignores human agency and history. That math is being applied by specific groups of humans with specific outcomes in mind, and with specific interests or classes gaining or losing advantage in the process.
In other words, “Cui bono?”
And maybe the tautological and entropic co-devolve in the CryptoSphere…
How will we know we have hit the peak of the bubble? When Kim dot com changes his name to Kim Blockchain.
Seriously speaking, this bubble (from 2011) lacked one word to describe it. It was all over the place with big data, ai, self driving cars, ready made food sent by mail, apps, and the most important one anything social. None had the cachet to make the bubble run away and make it easy for elevator talk. Blockchain does it. OTOH, you could argue we wasted a few bubbles all at once as each one, or at least some, of the above monikers should have been big bubbles in their own right. Alas, our brains addled by all the distractions have made us less efficient than what we were 10 years ago. A decade back, we would focus on one bubble at a time.
Just a question
Is it immoral or unethical for hackers to hack into these companies,which are themselves immoral and unethical ponzu schemes?
Sandra Bullock on a speeding bus with a explosive device set to go boom if bus slows below 55 m.p.h. on a route that only has one passenger a day A Mrs. J.Yellen speeding down a river walk full of strollers…….
The stunned look of everyone after bill gates caused the dot.com bust! Strong hands and sturdy parachute suit remember to roll!
The “Quantum Currency.” Existence depends upon being observed. And, when observed, position and vector cant be simultaneously ascertained.
How about wolfstreet,COM ? Oh I see, you already did that! :)
When we remember we are all mad, the mysteries disappear and life stands explained. M.Twain.
Checking the chart of Domino Pizza and then checking that article on “worst” pizza franchises, and DP is number one, but someone said, their stock is not based on the product but on their new robotic delivery systems. Ah bad pizza comes faster, hotter and fresher than ever. And who makes the worst fiat currency? No matter if you print enough of it hot fresh and ready to invest and you get it to consumers faster than the competition. Technology is about speed not information.
The SEC doesn’t seem to be interested in regulating anything related to stock manipulation anymore. At a minimum crypto currency should be regulated and the exchanges policed like any other security. Of course that assumes that the rule of law is being enforced. The SEC/treasury/fed strategy seems to be hands off until everything blows up, then bail out the usual suspects.
The only currency I believe in is the one right here at Wolf Street. I am waiting for the this website to explode, as its the only place I can go which has the most intelligent articles and commentary.
It’s almost a kept secret.
I’ve said it before and I’ll say it again, all your old conventions are dead.
Its a free for all right now. Don’t wait for cooler heads to prevail, they don’t have heads!!
Keep your powder dry and don’t try to make sense of it, they don’t play in your world…..
Well how about the same stunt pulled by the good old Kodak: https://www.theverge.com/2018/1/9/16869998/kodak-kodakcoin-blockchain-platform-ethereum-ledger-stock-price