US SEC Charges Longfin Fintech Firm For Insider Trading

SEC Files Complaint Against Crypto-Affiliated Longfin For Insider Trading

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  • US SEC carried out an investigation on Longfin Fintech firm.
  • The outcome of the investigation revealed the firm is operating insider trading.

United States: The US Securities and Exchanges Commission (SEC), earlier this week, commenced an investigation on the US-based NASDAQ-listed fintech firm (LFIN), Longfin, which made the stock value of the firm dropped by 30 percent. However, a report released yesterday 6th April by the SEC showed it has charged LongFin Fintech firm and its CEO, Venkat Meenavalli, with securities fraud. The report also showed that SEC has frozen more than $27 million which LongFin generated through “illicit trading profits.” The lawsuit filed in the Manhattan federal court, charged LongFin Fintech firm of operating insider trading, selling “tens of thousands of restricted shares” to Suresh Tammineedi and Dorababu Penumarthi and “over two million unregistered, restricted shares” to Amro Altahawi. These individuals were charged with consequently selling these shares to the public when the price of Longfin’s stock was “highly elevated” as a result of Longfin’s well-publicized purchase of “purported” cryptocurrency firm SEC reported that Longfin group’s post-acquisition market capitalization rose to more than $3 billion.

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The SEC seeks penalizations and wants Longfin to disgorge the “ill-gotten” gains according to Section 5 of the 1933 Securities Act. Chief of the SEC Enforcement Division’s Cyber Unit, Robert Cohen stated:

“We acted quickly to prevent … the profits being transferred out of the country.”

Right before the SEC lawsuit against LongFin Fintech firm broke out, the firm had already been stalled in a controversy. Last March, Longfin was barred from the Russell 2000 and 3000 indices, with spectators posting tweets that the company was “a pure stock scheme.”

However, Venkat objected earlier this week on CNBC’s Fast Money:

“I’m not going to sell [for] three years,”

Furthermore, Nasdaq stopped its trade in Longfin shares on 6th April – this action came before SEC released its report.

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