- Longfin and its former Indian CEO are accused of generating fake documents that recorded over $66 million in “sham revenue.”
- Longfin CEO has been ordered to pay $6.8m to settle charges.
As per Finance Magnates, the US Securities and Exchange Commission (SEC) has filed a new fraud charge against Longfin Corp and its CEO relating to accounting fraud and unregistered ICO. Longfin Corp has been ordered to pay $6.8 million to settle charges. The US regulators accused Longfin of selling more than $33 million of stock in unregistered transactions. Longfin and its CEO, Venkata Meenavalli, were also charged with generating fake documents that recorded “sham revenue” of more than $66 million.
The now-defunct cryptocurrency company was not involved in any revenue-producing transactions. The multimillion-dollar accounting fraud enabled Longfin to report 90 percent of its 2017 revenue as commodities transactions. However, that was mere “round-trip events” between the company and entities it controlled.
Longfin had also obtained Longfin secured SEC’s Regulation A+ crowdfunding exemption to go public on the Nasdaq exchange. The company’s shares increased 13-fold over a few days making the company worth more than $3 billion. Longfin declared that it is managed and operated in the U.S while seeking Regulation A+ exemption. However, SEC reported that the company’s operations, assets, and management remained offshore.
The SEC also claims that Longfin wrongfully fast-tracked Nasdaq’s IPO process by giving away 400,000 free shares to insiders and affiliates. They did so without obtaining payment for the shares.
Based in New York, Longfin had offices in New Jersey. In June 2019, the company was ordered with three associates to pay over $26 million in disgorgement and penalties. The SEC won a court order of $284,139 and $28,416 in fines against Longfin and Meenavalli, respectively.
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