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An update from the courtroom shows that Venkata S. Meenavalli, the CEO of the embattled crypto firm Longfin, has finally yielded to paying a disgorgement fine of $400,000.
The case filed against the supposed cryptocurrency firm last year by the SEC at the US district court for the southern district of New York alleged that Longfin Corp. and its acting chief executive officer misinterpreted their finances and lied to obtain a listing on the Nasdaq.
According to the complaint, Longfin CEO Meenavalli created and managed a scheme that helped him sell over 400,000 shares during a fraudulent public offering.
In a bid to close loose ends, Meenavalli together with his accomplices misrepresented the firm’s financial status to both investors and the Nasdaq. Of course, you need an approval from the authorities to operate and appear genuine, and that is exactly what they did. Only they misrepresented the company and its shares to the Nasdaq to earn a listing.
Citing the complaint drafted by the SEC, Meenavalli colluded with some affiliates who pretended to be investors. Little did the Nasdaq know that these affiliates actually paid nothing for their shares. They were all in the game with Meenavalli.
Besides misrepresenting the firm to the Nasdaq, Meenavalli and its accomplices also lied that the cryoto firm is based in the New Jersey and New York in the United States. This wasn’t the case either.
Adding to their list of lies, investigation also showed that over 90% of the revenue Longfin supposedly made in 2017 was fictitiously derived from “sham commodities transactions.”
Concerns of Additional Future Frauds
The Associate Director of the Division of Enforcement Anita B. Bandy stated:
“As alleged in our complaint, Meenavalli abused the Reg. A+ process to conduct a fraudulent offering, list Longfin on Nasdaq, and entice investors with falsified revenue. The SEC staff’s quick actions exposed the full scope of Meenavalli’s fraud and resulted in additional monetary and prophylactic relief to prevent him from defrauding U.S. investors in the future.”
Thankfully, the truth came to light despite their hard effort to sweep it under the rug. The CEO of Longfin was nabbed together with his accomplices.
So far, the SEC has been able to recover up to $26 million from his accomplices and Meenavalli has agreed to pay $400,000 in disgorgement and penalties. This total was reached by adding all his salaries during his time as the CEO of Longfin ($159,000) to the prejudgement interest slated at $9,000 and a $232,000 civil penalty.
The SEC plan on setting up a Fair Fund so as to distribute the money collected to affected investors.