Fintech Firm Longfin to Pay $6.8 Million For A Fraudulent Regulation A Offering In 2017
Longfin’s CEO, Venkata S. Meenavalli, has been fined a penalty of $6.8 million by the Exchange Commission (SEC) and US Securities. This is because his cryptocurrency company was involved in fraudulent activities and also an unregistered ICO.
The US regulator announced on Monday the ruling of the case that involved Longfin and its CEO accusing him of curating a fraudulent scheme. The scheme was aimed at inflating his company’s revenue. The US watchdog accused Longfin of vending unregistered transactions amounting to $33 million.
Additionally, Longfin and the former CEO who is already indicted by US prosecutors were accused of creating fake documents that brought “sham revenue” of over $66 million to the company.
Falsely Acquired Reservation for the Regulation A+ Offering
According to SEC, the CEO and his company illegally obtained the reservation for a Regulation A+ offering by pointing out that the firm was operational within the boundaries of the United States. It is not the case as all the operations of this company are based outside of the United States.
The watchdog filed the complaint to the federal district court, noting that Longfin forged about 90% of its revenue and traded more than 400,000 shares to affiliates and insiders. The company is said to have
“misinterpreted the number of qualifying shareholders and shares sold in the offering to meet Nasdaq listing requirements.”
Block.one and SEC agree on $24 Million Penalty
On Sep. 30, SEC announced that it had reached an agreement with Block.one. The company is supposed to pay $24 million in penalties because they had conducted an unregistered ICO. The Exchange Commission claimed that this firm raised billions of dollars, but it did not register the initial coin offering as a securities offering.
According to US federal securities laws, the ICO was supposed to be registered and also that Block.one Company failed to seek exemption from registration requirements.