Shares of Longfin Corp. (NASDAQ:LFIN) were down 31.2% as of 11:48 a.m. EDT Tuesday following news that the financial technology and blockchain specialist will be removed from the Russell 2000 Index less than two weeks after joining it.
More specifically, in a statement this morning FTSE Russell announced that Longfin has failed to meet the minimum requirement for having 5% of its free float available to the public, so will be removed from the Russell 2000 Index after market close on March 28, 2018.
The news comes less than a week after Longfin announced that it had been added to the widely followed index, effective March 16, 2018. It also extends a nearly 17% slide on Monday, which came after noted short-seller Citron Research tweeted that the company is a "pure stock scheme" whose "filings and press releases are riddled with inaccuracies and fraud."
Before that, Longfin stock had soared as much as 2,600% in recent months after the company announced it had purchased cryptocurrency company Ziddu.com, calling it a "blockchain-empowered global micro-lending solutions provider."
To be fair, Longfin's own chairman and CEO, Venkat Meenavalli, surprised investors in December after telling CNBC that his company's "market cap [was] not justified" following the Ziddu-induced pop.
"We are a profitable company," he added at the time. "We have nothing to do with this euphoric mania."
But it's hardly surprising that shares soared given the excitement that tends to surround small companies that suddenly tout ties to the cryptocurrency industry. In any case, it's equally unsurprising that the stock would continue its descent this week after the one-two punch with Citron and its Russell 2000 Index removal. And given the high chance for sustained volatility in the coming days, I'm perfectly content watching its story unfold from the sidelines.