- Long Blockchain Corp and Longfin Corp have been issued with delisting notices by the NASDAQ stock exchange.
- Both companies saw their stock price surge in December after announcing blockchain-related updates.
Two companies that pivoted to blockchain and saw their share prices rocket higher look set to be ousted from the NASDAQ stock exchange.
Both Long Blockchain Corp. and Longfin Corp. were served with delisting notices after they struggled in recent months to keep their market capitalisation above $US35 million — the minimum size required for listing.
Bloomberg reports that Long Blockchain was suspended by NASDAQ, under a ruling which gives the exchange authority to remove companies with a history of misconduct.
Longfin Corp then announced that it received a delisting notice for failing to lodge a quarterly report on time.
At the height of the cryptocurrency craze in December when Bitcoin prices hit record highs, Long Blockchain quadrupled its stock price — from $US2.15 to $US9.49 — simply by changing its name from Long Island Iced Tea.
But the company didn’t actually have any blockchain operations, and soon enough the share price fell back to $US3.15.
Long Blockchain subsequently announced it would purchase 1,000 bitcoin mining machines, but backpedaled on those plans in February.
At that time, Long Blockchain was issued with a separate delisting notice by NASDAQ for providing information that was misleading to investors.
As for Longfin Corp, its shares also surged by 2,400% in December when the one-year old fintech company announced that it was “pivoting to blockchain”.
But last week the company came under fire as the US Securities & Exchange Commission alleged that Longfin Corp’s CEO and his associates sold $27 million in restricted company stock, in an attempt to cash in on the surging share price.
The SEC has filed a court order to freeze $27 million in question.
According to Bloomberg, Long Blockchain said it plans to apply for its stock to now be traded over the counter. While Longfin plans to complete a notice of compliance which may convince the NASDAQ to extend its filing deadline.
The latest developments are perhaps a sign that the hype and euphoria surrounding blockchain and cryptocurrencies is starting to cool as the market enters a more mature phase.
Remember Kodak? Shares in the 130 year-old camera company ripped higher in January this year when it announced a new blockchain initiative.
But as this chart shows, Kodak’s stock price has steadily declined since then:
Some analysts have compared the hype around blockchain to companies adding “.com” to their name at the height of the late-90’s dot-com boom.
For now, the use of blockchain technology remains a work in progress for most companies. Domestic exchange the ASX200 announced in December that it will shift to a blockchain-based clearance and settlement platform this year.
An update was scheduled to be announced in March, but a spokesperson for the ASX told Business Insider that the next announcment has been delayed until late-April.