Tag Archives: blockchain

The Blockchain Name-Change Game And Securities Fraud

The rape and pillage of the blockchain name-change game took on a whole new dimension with Kodak (KODK) this week.  KODK was on the way to its second bankruptcy filing this decade (first one was January 2012).  On January 9th it announced that it implement a “major blockchain initiative.  This “initiative” would use digital ledgers to help photographers license and get paid for their work.  The stock soared:

Notwithstanding whether or not this “block chain initiative” will ever generate meaningful profits for KODK, it turns out that insiders at the Company filed S-4’s with the SEC disclosing that they were awarded 10’s of thousands of “restricted stock units.” The problem with this? The RSU’s were awarded on January 8th, the day before the “blockchain” announcement was released on January 9th.  The timing of this filing is quite curious.

The Company released its Q3 10-Q on November 8th.  Revenues plunged 32% yr/yr for the 3rd quarter; operating income swung from $15mm in Q3 2016 to a $54mm loss in Q3 2017. The Company is dying on a vine.  Ordinarily compensation stock in the form of RSU’s is awarded at the end of each quarter. The issuance of RSU’s is disclosed in the 10-Q.  No mention whatsoever of management or employee stock compensation awards.  No mention whatsoever in the MD&A of a plan to incorporate “blockchain” in any part of the business model.

All of the above, in conjunction with the sudden disclosure of large quantities of free stock in the form of RSU’s the day before KODK’s “blockchain initiative” announcement tells me that this was a scheme hatched sometime well after the Q3 10-Q was filed by unscrupulous corporate executives who saw an opportunity to exploit the massive blockchain stock and cryptocurrency bubble.

In all probability, these insiders have likely arranged to hedge the gains on the underlying stock represented by the RSU’s using OTC derivatives underwritten by Wall Street banks. These would be derivatives structured in a way that would escape the requirement to disclose the transaction in an SEC filing.  Instant profits on derivative stock that was awarded the day before news was released by the Company – news that upper management knew would send the stock to the moon.

Based on the black and white letter of the law, KODK upper management technically has not violated a strict interpretation of insider trading laws.  However, 20 years ago it’s highly likely that, if lawsuits were pressed, KODK’s upper management and board of directors would have been prosecuted and convicted of insider trading.

Fast-forward to 2018, near the end of a stock and fraud bubble that is multiples of the one that occurred with dot.com’s in the late 1990’s, and everyone looks the other way including the NYSE, SEC and Justice Department.

It’s a good bet this “blockchain initiative” will never generate any meaningful profits for the Company.  Most likely KODK is headed for a Chapter “22” filing before the end of this decade because bleeding cash profusely and it is mired in large pension and debt liabilities.

This is an example of the blatant fraud and corruption that accompanies the top of stock market bubble and the collapse of a political and economic system.  The blockchain and cryptocurrencies will not revolutionize life as we know it nor will they generate real economic wealth for anyone other than those in a position to exploit the greed and fear of missing out of the idiots who buy into the fairytale.

As expressed by Fred Hickey in his High-Tech Strategist newsletter, {Bitcoin/blockchain} “is the cherry on top of the world’s first truly global market bubble.”

The Fatal Mistake Crypto Investors are Making Now

I find it amusing that the stock market is attributing so much value to the “blockchain” technology.  In reality, blockchain technology is just a piece of software that increases the degree of security for digital transactions.  I fail to see how this will revolutionize our lives the way the roll-out of the internet or the implementation of mass production or the invention of the internal combustion engine or the harnessing of electricity  changed and affected our daily lives.  I believe the technology has been egregiously over-hyped by promoters who make unrealistic claims about the potential for blockchain software.

But for now it sure is a great “buzzword” for unscrupulous operators to make  a lot of money selling blockchain “snake-oil” to suckers.   Just add the word “blockchain” to the name of your company and the stock will triple in a day.  It’s like the dot.com bubble when any stock with “dot.com” in the name of the company soared.  99.9% of those stocks disappeared completely by 2003.

This article was written Josh Brown of The Reformed Broker

Let’s start our discussion with the technology which made Bitcoin possible called “blockchain”. In very simple terms the blockchain technology is a record of all transactions ever done in Bitcoin. Imagine a gigantic piece of paper that lists every transaction ever completed. Then imagine that there are thousands of copies of this paper, and all of them are automatically updated when any two people agree to exchange Bitcoins. Every time a transaction takes place all these copies are checked for consistency to make sure you actually have the Bitcoins you claim to have. If everything checks out the new transaction is added to all the pieces of paper at once.

This is the heart of the truly genius idea that is blockchain, and it is what it makes it possible to have certainty over a Bitcoin balance someone owns, without needing any central party (like a bank) to verify it. If all the pieces of paper agree then the balance is correct, and trying to doctor or fake all the pieces of paper at once is impossible. The best (and worst) thing about this technology is that it has been made available for absolutely FREE to anyone who wants to use it.

You can read the rest of this here:  The Fatal Mistake Crypto Investors are Making Now