Eric Watson has been charged with insider trading in the US after shares were traded in a drinks company before it switched to blockchain technology, sending its share price soaring.

Watson, a former convict and New Zealand rich-lister, drove - despite being an undisclosed control person of the company - the change of Long Island Ice Tea Corp's rebranding to Long Blockchain Corp, according to a United States' Securities and Exchange Commission statement reported by Bloomberg News.

Watson tipped off his friend and broker, Oliver Barret-Lindsay, who then told his friend, Gannon Giguiere, who made more than $160,000 (NZ $229,000) in illegal profits, the commission said.

Long Blockchain jumped more than 380 per cent intraday in December 2017 after the company issued a press release announcing its new name.

The company was among a number of obscure micro-cap companies which embraced 2017's massive Bitcoin rally by announcing new business ventures focused on cryptocurrencies, Bloomberg News reported.

That piqued regulators interest, and Long Blockchain's stock was eventually delisted by the commission in February.

Lawyers representing Barret-Lindsay and Giguiere didn't immediately respond to requests for comment, and Bloomberg News was unable to contact Watson, it said.

Watson was previously co-owner of Hanover Finance, which left thousands of New Zealand investors hundreds of millions of dollars short after it collapsed at the beginning of the global financial crisis.

The charge is not Watson's first brush with the law.

Last year he was sentenced to four months' jail by the High Court of England after he was convicted of contempt of court for withholding information about his assets in the long-running legal battle with New Zealand philanthropist Sir Owen Glenn and his company Kea Investments (Kea).