Long Blockchain to acquire UK-based cryptocurrency company

Long Blockchain Corp., formerly known as Long Island Iced Tea Corp., Thursday announced an agreement to acquire a London-based cryptocurrency and blockchain company.

The all-stock deal for Hashcove Ltd. marks one of the Farmingdale company’s first moves to transform its core business from ready-to-drink beverages to digital finance.

Long Blockchain shares rose 3.8 percent Thursday to close at $2.99. The company’s shares climbed as high as $9.49 in December after it announced it was changing its name from Long Island Iced Tea and focusing on bitcoin and blockchain technology. The company said it plans to spin off its iced tea business to shareholders.

Hashcove's web site says its products include a blockchain platform for securely uploading and sharing documents; a wallet for storing, sending and receiving cryptocurrencies, and  smart contracts embedded in a blockchain, a shared, digital ledger.

The agreement, which calls for Hashcove to become a wholly owned subsidiary of Long Blockchain. is expected ot close in the second quarter of 2018. Hashcove shareholders will own 4.9 percent of the combined entity, a level that could be increased to as much as 17.1 percent based on performance milestones.

In a statement, Shamyl Malik, Long Blockchain’s chief executive, said that the products under development at Hashcove offer “great strategic value” for Long Blockchain.

“Hashcove’s resource base, including a team of developers in India, will give Long Blockchain an international footprint and allow us to leverage a center of excellence in one of the fastest growing and most tech-savvy markets in the world,” he said.

Hashcove was co-founded by its chief executive Kunal Nandwani, who has worked at BNP Paribas in Paris and Lehman Brothers in London.

In January, Long Blockchain signed a letter of intent to merge with UK-based Stater Blockchain Limited, a financial technology company. Terms of the all-stock deal were not disclosed and Long Blockchain said there were no assurances the merger, under which Stater would become a wholly owned subsidiary, would be completed.

Long Blockchain has come under scrutiny as one of several U.S. companies whose stock got a lift after announcing a change in name or strategy related to cryptocurrencies or blockchain technology. The company also is appealing a delisting notice from the Nasdaq Stock Market and was singled out by  HBO’s “Last Week Tonight with John Oliver” in a satire about the mania surrounding cryptocurrencies. That mania has been tempered in recent months by a decline in the price of bitcoin, a widely held cryptocurrency. Bitcoin traded late Thursday afternoon at 8,260, far off its 52-week high of $19,870. 

Bitcoin and other cryptocurrencies are digital currencies that are not controlled by a centralized bank or government and allow users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verify other users’ transactions. They receive coins in exchange. A blockchain is a decentralized digital ledger of every transaction in the currency, but could be applied to other purposes, such as recording property records, tracking pharmaceuticals or settling stock trades. 

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.