A deal that would have seen Eastman Kodak get funding to produce drug ingredients that could have helped fight the coronavirus has been put on hold.
In a tweet Friday evening, the U.S International Development Finance Corporation said it was holding up the deal as regulators reportedly look into trading activity that sent Kodak's shares surging on news of the initial agreement.
Shares of the company shed roughly 45% in premarket trading on Monday.
"We will not proceed any further unless these allegations are cleared," the DFC said.
A probe by the Securities and Exchange Commission is focused on how Kodak, once known for producing camera film, disclosed the deal with the government, according to a Wall Street Journal report Tuesday. The Journal reported earlier this week that the investigation is in the early stages and may not produce allegations of wrongdoing.
As the news broke, Kodak, which had been trading at $2.62 a share on July 27, the day of the announcement, hit $60 within two days. The stock closed at $14.88 Friday after losing 7.6% during the session.
Kodak released the news to local reporters in Rochester, New York, where it is headquartered, on July 27 then asked several outlets that had picked up the story to delete it, which they did. Questions have been raised by Sen. Elizabeth Warren, D-Massachusetts, and others about the possibility of insider trading involving the announcement.
White House economic advisor Peter Navarro on Friday praised the DFC for its move, saying he was "very disappointed" about the allegations.
CNBC has reached out to Kodak for comment.