At CCN.com we have been following the Kodak story – a once monolithic print photography company that has struggled to adapt to the digital world. The announcement that the brand was turning to blockchain with KODAKCoin, which aims to protect photographers’ digital rights utilizing immutable distributed ledger technology, swept through the crypto space. Despite the ICO’s early wobbles, when the coin finally launched it tripled from its ICO price, leaving initial investors pleased and observers optimistic regarding the company’s transformed future.

However, investment research firm Kerrisdale Capital this week has released a crippling 22-page indictment on the project.

Referring to the company as a “dying relic of American manufacturing”, (KODAK went bankrupt in 2013), Kerrisdale sees the $300m ICO as a cash grab that “will never deliver promised benefits”.

Their report is damning, stating that whilst:“blockchain and cryptocurrencies are exciting technologies with the potential to disrupt many industries; their use in media rights licensing by KODAKOne will not be one of them”.

They go on to describe the project as a “moribund company’s hollow attempt to chase the ICO craze” and the team as having “zero credibility”.

Investors were further warned that the cryptotoken is in their eyes of no value, stating:

“We view the equity as worthless, implying downside of -100%.”

In Black and White

The central criticism is that the project uses buzzwords such as “AI-enabled image recognition” and “encrypted digital ledger” to generate hype and “speculative mania”, obscuring the reality that the project cannot achieve it’s stated goals. According to the firm, “cryptographic hashing will not prove the provenance of IP and using blockchain does not diminish the resources necessary for infringement detection and enforcement”.

In other words, the project won’t be able to protect photographers any more than they currently are, and that “there is no practical advantage to using blockchain”.

An unnamed blockchain expert the firm spoke with predicted that:

“[O]nce the speculative mania has left….what will be left will be a dry husk of a software application that will never do what it was marketed to do”.

The report goes further than criticizing the blockchain platform, it also raises allegations of “highly suspicious trading” by the company and predicts future SEC investigation.

Last month CCN.com reported upon the Kodak KashMiner, a piece of crypto mining hardware leased by KODAK for $3400. In addition to the lease fee, customers were also obligated to return 50% of their mined Bitcoin to the company. Kerrisdale conducted further research on the mining rig, and discovered that it was allegedly a Bitmain Antminer S9 with the label replaced.

The report concludes that Kodak are “impostors” with their attempt to jump on the blockchain tech bandwagon, and foresee that the funds they have generated will not protect the company from the “gravity of dying, old-world fundamentals”.

This report may come as yet another call for greater investor care in the speculative ICO market, in line with recent SEC regulatory plans. In this space, it’s easy to generate hype and mania, covering the absence of working fundamentals or a viable model. Whether the report is accurate or not in it’s assessment of KODAKCoin remains to be seen. The company provides assessment spanning a broad range of investments, from pharmaceuticals to popular retailers, and so are not blockchain specific experts.

Featured image from Shutterstock.