Watson-linked Long Blockchain subpoenaed by SEC

An Eric Watson-backed company that gained global headlines for a sudden refocus from beverage manufacturing to blockchain technology has been subpoenaed by the US Securities and Exchange Commission.

The agency has asked for certain documents, Long Blockchain Inc says in a regulatory filing, without elaborating.

The subpoena was dated July 10, but not disclosed to the market until today. 

Long Blockchain, whose shareholders include former Hanover Finance co-owner Mr Watson, was delisted from the Nasdaq in April following concerns it was misleading investors while its market cap fell below what is generally accepted by the stock exchange.

The subpoena comes hard on the heels of a High Court decision in the UK which labelled Mr Watson’s dealings with Sir Owen Glenn “secretive” and “misleading.”

Long Blockchain now trades on the over-the-counter (OTC) “pink sheets” market with a warning flag to investors that says the company may not be making material information publicly available.

“The company is fully cooperating with the SEC’s investigation,” Long Blockchain said. “The company cannot predict or determine whether any proceeding may be instituted by the SEC in connection with the subpoena or the outcome of any proceeding that may be instituted.”

The company originally listed in the US through the backdoor of Cullen Agricultural Holding Corp, which had earlier merged with a blank-cheque company started by Mr Watson and business partner Jonathan Ledecky.

Until its pivot to blockchain technology it was known as Long Island Iced Tea Corp, producing and distributing premium ready-to-drink iced teafor the American consumer market.

In 2015 it hired former Lion NZ boss Julian Davidson as it looked to break into the ready-to-drink alcohol market.

However when the company became Long Blockchain, Mr Davidson left and this year initiated legal action against the company over the terms of his separation.

The rebrand to blockchain initially saw the company’s shares soar by 400%, but its market value has since fallen from as much as $US95 million to less than $US10m.

Mr Watson and associated interests hold about 15% of the shares in Long Blockchain.

Another New Zealand expatriate, former publisher and close friend of Mr Watson, Tim Connell, is also involved through Stater Blockchain, in which Long Blockchain holds a minority stake.

However, Long Blockchain has since announced that it has again changed its line of business and will now also focus on loyalty schemes and gift cards.