The United States’ securities regulator on Wednesday confirmed that it has filed new charges against Longfin Corp and its former CEO Venkata Meenavalli for falsifying revenue figures to secure a listing on a stock exchange.
The company came on the radar of the Securities and Exchange Commission (SEC) in 2017 when its shares jumped 2,000 percent after announcing a blockchain pivot. Per the accounting fraud charges, Longfin generated more than $66 million in fake revenue, which represented more than 90 percent of the company’s actual revenue in 2017.
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Previously, the SEC charged the company for freezing more than $27 million in allegedly illegal trading proceeds from unregistered distributions of Longfin stock.
The recent complaint against the company and its former CEO was filed in a federal district court in New York City.
“The complaint alleges that Longfin and Meenavalli obtained qualification for a Regulation A+ offering by falsely representing in SEC filings that the company was principally managed and operated in the U.S. when, in fact, the company’s operations, assets, and management remained offshore,” the press release noted.
The market watchdog also alleged that the company illegally distributed more than 400,000 shares to insiders and affiliates to meet certain criteria while listing on Nasdaq.
“Today’s filings reflect the work of a dedicated SEC staff who, after moving swiftly on behalf of investors to freeze assets last year, continued investigating to uncover the alleged fraud,” Anita B. Bandy, associate director of the division of enforcement at the SEC, said.
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The securities regulator has been taking down shady crypto business and over the years has cracked down on businesses trying to raise funds by selling illegal blockchain-based securities.
Earlier this week, Finance Magnates reported that the SEC is filing a lawsuit against Canadian messaging company Kik for raising $100 million selling illegal securities coins via an initial coin offering (ICO). The messaging company was prepared for such a move by the regulator and has already established a $5 million fund for legal fees.