Securities and Exchange Commission published a document on January 03, stating that the CEO of crypto firm LongFin Corp is agreed to settle SEC over fraudulent public offering and misrepresentation of business dealings.
It was reported that Venkata Meenavalli, CEO of Longfin Corp agrees to settle SEC’s fraud action against him by paying $400K in disgorgement and penalties. However, the settlement subjects to court approval, the report highlights that the regulator accrued over $26million from Longfin. More so, SEC claims that the firm secured qualification for a Regulation A++ by misrepresenting facts including “the company was operated in the US”.
If the court approves the settlement, the CEO will disgorge the $159,000 as CEO of the firm and $9000 in prejudgment interest and $232000 in civil penalties. Furthermore, regulators quickly note that the money received as the settlement may be distributed back to affected investors. It was also noted that the regulators are separately proceeding a criminal action against Meenavalii.
“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, said Anita B. Bandy, Associate Director of the Division of Enforcement.
As per the complaint, the firm attempted misrepresentation to Nasdaq to meet its listing requirements. One such misrepresentation includes that the Longfin’s 90% of revenue in 2017 derived from sham commodities transactions. However, there is a parallel criminal case obtained by the SEC in Sept last year. The case was reportedly filed against the same firm from a federal court in New York which alleged Longfin to pay approximately $6.8 million in penalties and disgorgement.
As for now, Meenavalli agrees to settle the case without admitting or denying the regulator’s allegation.