The US Securities and Exchange Commission (SEC) is suing alleged cryptocurrency company Longfin Corp. and its Chief Executive Officer Venkata S. Meenavalli.
2017 Issue with Longfin
In a recently released press statement, the SEC claimed that back in 2017 Longfin saw a huge increase in its share price when the company announced that it had shifted its business model to blockchain technology.
Anita B. Bandy, the SEC’s Division of Enforcement associate director, succinctly explained that their complaint against Longfin Corp and its management focused on allegations that the company was involved in a “multi-pronged fraud” that involved misrepresentations to the SEC, fake revenue, and giving false claims to Nasdaq.
90% Falsified Profit
The SEC filed the charges in Manhattan’s federal court. The complaint claimed that Longfin falsified 90% of its profit and sold more than 400,000 shares of Longfin that it didn’t have the funding to support. The scheme is alleged to ensure that the firm secures a place on the Nasdaq.
The charges also mentioned that the commission accepted Longfin’s Regulation A+ offer based on the premise that the firm is managed and operates in the US. But in reality, Longfin’s assets, management, and operation were offshore.
Charges against Meenavalli
The SEC has included Longfin consultant Andy Altahawi in its charges of reporting the false number of shareholders and shares sold in the company’s Nasdaq public offering. The US Attorney’s Office of New Jersey has also filed charges against Meenavalli.
Longfin and Meenavalli were already charged by the SEC of securities fraud. The company’s $27 million trading profits were frozen last year.