KODAKCoin: a blockchain revolution or exploiting a potential cryptocurrency bubble?

ABSTRACT

Eastman Kodak is an American technology company that produces imaging products. In 2018, it announced its intentions to enter the crytpocurrency market, raising concerns that it could be taking advantage of a potential cryptocurrency bubble for short-term gains. We analyse the relationships between Kodak, crytocurrency and stock market index returns. We find evidence of a significant, sustained increase in both the share price and price volatility of Kodak after the KODAKCoin announcement, with an increased correlation between the price of Kodak shares and Bitcoin.

KEYWORDS:

• Cryptocurrencies
• digital assets
• GARCH
• Kodak
• KODAKCoin

JEL CLASSIFICATION:

• G14
• G00

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ ‘Pump-and-dump’ schemes involve the touting of a company’s stock (typically small, so-called ‘microcap’ companies) through false and misleading statements to the marketplace. These false claims could be made on social media such as Facebook and Twitter, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have ‘inside’ information about an impending development or to use an ‘infallible’ combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is ‘pumped’ up by the buying frenzy they create. Once these fraudsters ‘dump’ their shares and stop hyping the stock, the price typically falls, and investors lose their money. SEC https://www.sec.gov/fast-answers/answerspumpdumphtm.html.