Kodak Delays Cryptocurrency ICO As Short Interest In Stock Surges

This is definitely not turning out to be a Kodak moment.  

Eastman Kodak Company (KODK) has delayed its ICO, which was slated to be held today, by "several weeks." During this time, the company claims it will verify the accredited investor status of the 40,000 applications it has received for investing in its offering. Short interest in Kodak's shares had reached a peak on January 30, ahead of the initial coin offering.

According to a Bloomberg report, short sellers had taken a position in about one-third of the Rochester, NY- based company’s shares. This is the highest level of shorting that Kodak’s stock has witnessed since 2012, when it filed for bankruptcy. It is also an about-face for Kodak’s shares, which jumped by as much as 200 percent following the cryptocurrency’s announcement earlier this month. (See also: Kodak to Launch Cryptocurrency; Stock Soars 200 Percent On News.) 

A Critical Assessment 

The New York Times columnist Kevin Roose writes that Kodak may be the “most controversial” of all companies pivoting towards blockchain. He quotes Kyle Samani, partner at Multichain Capital, as saying the company’s move is that of “a publicly-traded company issuing a token to raise its stock price from the grave.” (See also: Kodak Jumps On The "Block-Train" And Breaks Out.) 

In his investigation, Roose also found that Cameron Chell, who calls himself the architect of KodakCoin on LinkedIn, was banned from the Alberta Stock Exchange for five years and fined $25,000 for violating its rules. Chell's company, Appcoin Innovations, functioned as a literary agency until 2017, and has not reported revenues in the last two years. 

Then there is the fact that ICOs are only open to accredited investors or individuals with income greater than $200,000 or a net worth of $1 million or more. Kodak has advertised its cryptocurrency as a coin that democratizes photography and makes licensing work for artists by securing their work against the blockchain. “How many cryptocurrency-obsessed millionaire photographers do you know?” asks Roose. 

Kodak’s other announcement relating to cryptocurrencies – the launch of a bitcoin mining machine called KashMiner – was also termed a scam. A Buzzfeed article noted that the machine, which can only be leased, does not take into account the increasing difficulty in bitcoin mining’s algorithm and, therefore, its cost estimates are unrealistic and designed to profit Kodak. (See also: Facebook Bans Ads for Cryptocurrencies and ICOs.)

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Site Edit or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Site Edit makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin. 

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