SEC Halts $27M in Stock Sales Tied to Crypto Company Longfin
Longfin chief executive Venkat Meenavalli and three others are charged with illegal sales of the crypto company's stock.
April 06, 2018 at 03:06 PM
3 minute read
Credit: 3Dsculptor/Shutterstock.com
The U.S. Securities and Exchange Commission has halted more than $27 million in stock sales of cryptocurrency traded by Longfin Corp.
According to an April 4 complaint unsealed Friday in the U.S. District Court for the Southern District of New York, the SEC has obtained a court order charging the company, its chief executive Venkat Meenavalli and three other individuals with “illegal distributions and sales of restricted shares of Longfin Corp.”
After Longfin began trading on the Nasdaq in mid-December, its stock price climbed dramatically, and the individuals are accused of capitalizing on the uptick by illegally selling blocks of restricted shares.
“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” said Robert Cohen, chief of the SEC Enforcement Division's Cyber Unit, in a press release Friday. “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.”
The SEC alleges violations of Section 5 of the Securities Act of 1933 and seeks remedies including injunctive relief, penalties and disgorgement of ill-gotten gains.
Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi and Suresh Tammineedi are named defendants, in addition to Longfin and its CEO Meenavalli.
Jay Musoff, an attorney with Loeb & Loeb who is representing Longfin, did not immediately respond to request for comment. The company responded by sharing a statement that says it “intends to fully cooperate and address the concerns the SEC has raised” regarding the stock sales.
Meenavalli, Longfin's CEO, allegedly fielded the issuance of more than 2 million unregistered restricted shares to company secretary and director Altahawi and tens of thousands of restricted shares to the other two individuals who were acting as nominees, or affiliates, for the company's top executive.
The individuals' subsequent sale of those restricted shares to the public violated federal securities laws, according to the SEC.
Altahawi's attorney, Robert Heim, partner at Meyers & Heim, did not respond to request for comment. And Penumarthi and Tammineedi did not respond to messages asking for comment.
This story has been updated to include a statement from Longfin.
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