Crypto firm Longfin ordered to pay SEC $6.8M in penalties
October 1, 2019, 2:50AM EDT
1 min read
Cryptocurrency firm Longfin Corp. has been ordered by a federal court in New York to pay the U.S. Securities and Exchange Commission (SEC) about $6.8 million in penalties and disgorgement for conducting a fraudulent public offering and falsifying revenues.
The SEC announced the news on Monday, saying that Longfin and its CEO, Venkata S. Meenavalli, falsely represented in SEC filing that the company was managed and operated in the U.S. when its operations, assets and management remained offshore.
“Longfin and Meenavalli, as alleged, then distributed over 400,000 free Longfin shares to insiders and affiliates, and misrepresented the number of qualifying shareholders and shares sold in the offering to meet Nasdaq listing requirements,” the SEC said.
The regulator added that Longfin and Meenavalli allegedly recorded more than $66 million in fictitious revenue from sham commodities transaction, amounting to more than 90% of Longfin's total 2017 reported revenue. Longfin’s price surged by over 2,000% in 2017 after it announced the acquisition of a blockchain startup. The firm shut down in November 2018.
The SEC has previously accused Longfin and Meenavalli of illegally distributing and selling over $33 million of Longfin stock in unregistered transactions. Those charges are resolved now, as Longfin and Meenavalli were recently ordered to pay civil penalties of $284,139 and $28,416, respectively.