Venkata Meenavalli, CEO of fraudulent financial services company Longfin, has settled for $400,000 with the US Securities and Exchange Commission (SEC).
A press release issued by the SEC last week states that an agreement has been reached for disgorgement and penalties.
The SEC initially filed fraud action against Longfin Corp and Meenavalli in June 2019 for falsifying company revenue and fraudulently listing on the Nasdaq stock exchange.
Longfin indicated that it would be acquiring cryptocurrency start-up Ziddu in December 2017, which caused the company’s shares to rise over 1,000% – a move the SEC alleges was insider trading.
Meenavalli publicly stated that the inflated value of his company following the acquisition announcement was an overvaluation in an interview with CNBC in December 2017.
However, the SEC accused Meenavalli of falsely representing SEC filings to make it seem like Longfin was a US-based company, when in reality it was based offshore.
The SEC has alleged that $33 million in Longfin stocks had been sold using unregistered transactions, of which $27 million had been successfully frozen during a preliminary injunction.
The regulator claims that the acquisition of a cryptocurrency company just two days after Longfin went public was a deliberate effort to pump the company’s stock alongside the cryptocurrency market hype.
Penalties and settlement
Meenavalli has now agreed to settle the dispute by paying $400,000 in disgorgement and penalties, which will bring a close to proceedings against him.
This includes $159,000 dollars in salary which he received while acting as CEO of Longfin, interest of $9,000, and an additional $232,000 civil penalty fine.
Meenavalli will also have to surrender his remaining Longfin stock, and he is barred from becoming a company director in the US for life.
Longfin’s CEO and three other executive officers personally gained over $26 million from the scheme, which the SEC is now seeking to redistribute to affected investors through a Fair Fund program.
The SEC has successfully enforced multiple orders recently, announcing in December that it had instructed Blockchain of Things to pay $250,000 for selling unregistered securities.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.