NY Court Orders Longfin to Pay $223M to Investors After Blockchain Pivot Turns Securities Fraud

In September 2019, the SEC received a judgment in its favor against Longfin, where a New York federal court found that the crypto firm falsified documents and data to receive Regulation A+ offering.

Longfin, a now-defunct crypto firm that raised $27 million in 2017, has been ordered by a Manhattan federal judge to repay $223 million to its investors along with interest in the alleged security fraud case. Longfin acquired an undervalued company back in 2017, after which its share prices surged by 1000%.

The judgment came on July 29, where the federal judge concluded that Longfin, along with its chief executive Venkata Meenaalli, CTO Vivek Ratakonda, and the director of two related companies, Suresh Tammineedi collectively owned a nine-figure sum. The case's ruling has granted a default judgment, as requested by lead plaintiff Mohammad Malik in January. The judge in his decision noted that Malik:

“offered sufficient evidentiary support through declarations and exhibits submitted in support of his claim for damages, and no evidentiary hearing is required.”

A Brief History of the Case

Longfin launched an IPO as a Regulation A+ offering back in September 2017, which allowed the firm to raise funds from both accredited and non-accredited investors. It also obtained waivers from several registration requirements of the Securities Exchange Act of 1934. It went on to raise $27 million by December and called its IPO a successful event.

At the time, the firm also claimed that it had become the first publicly listed fintech firm under Reg A+ on Nasdaq. Soon after a successful IPO, Longfin acquired Ziddu.com, a cloud storage solution that claimed it had incorporated blockchain technology. The price of Longfin’s share surged by 1000% from $5 a share to $140 in early 2018. However, shareholders accused the company of issuing false and misleading statements, which led to the 1000% surge.

The firm is also accused of selling its shares after the surge, which prompted the Security and Exchange Commission (SEC) to look into the firm’s working and investigate any wrongdoing. The SEC started their investigation in April 2018, and soon after, the price of the shares crashed.

In September 2019, the SEC received a judgment in its favor against Longfin, where a New York federal court found that the crypto firm falsified documents and data to receive Regulation A+ offering.

The court also found that Longfin lied about primarily operating from the US and lied about qualifying shares and shareholders sold in the offering. The court found that $66 million in revenue generated by the firm came from “fictitious revenue and sham commodities transaction” equivalent to 90% of the company’s revenue.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Rebecca Asseh
Rebecca Asseh
Rebecca Asseh is a blockchain and cryptocurrency journalist fascinated with sharing the knowledge of this technology in the simplest language possible.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,470FansLike
2,795FollowersFollow
4,231FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

Bitcoin (BTC) Jumped to $100,000 on Binance Futures

There have been several predictions that see Bitcoin hitting a six-digit figure. On Sunday, this became a reality, very briefly, thanks to an algorithm. Bitcoin...

Flash Crash Caused Serious Network Congestion for ETH, ETC, And ERC 20 Tokens on Coinbase

On August 1, the Ethereum's blockchain faced a spike in network transaction fees, causing a backlog in transfers across several exchanges. Coinbase and Binance,...

Bitcoin’s Wild Weekend Reminiscent of 2017 Bull Rally, ‘Higher Highs Ahead in 2020'

This past weekend, bitcoin had a rough time as the largest cryptocurrency made its way past $12,000 to $12,112 in trading just after midnight...

Former Bank of China VP Backs Digital Yuan As An Accelerator for a ‘Dual Circulation'

A former Vice President of Bank of China has said that replacing the fiat RMB in circulation (M0) with a CBDC is the way...

ZEC Breaks Out of 3-Year Bear Market as Executive Director Bids Adieu to Zcash Foundation

The inaugural executive director of Zcash Foundation, the company behind the 24th largest cryptocurrency by market cap $845 million ZEC, has left the Foundation....

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today