The Securities and Exchange Commission has frozen millions in illicit trading proceeds from the illegal distributions and sales of restricted shares of Longfin Corp. stock. The agency said today that the assets of Longfin CEO, as well as three other individuals involved in the scheme, have been frozen.
According to the SEC, the market capitalization Longfin rose above $3 billion on the NASDAQ, after the company announced the acquisition of a purported cryptocurrency business.
The SEC claims in their press release that Amro Izzelden Altahawi, Dorababu Penumarthi, and Suresh Tammineedi illegally dumped large chunks of their restricted shares on unsuspecting investors as the price of Longfin shares spiked on the news. Through this scheme, the trio allegedly amassed more than $27 million in illegal profits.
The SEC's complaint, unsealed today in federal court in Manhattan, alleges that Venkata Meenavalli, CEO of Longfin, directed the company to issue more than two million unregistered, restricted shares to corporate secretary and a director of Longfin, Amro Izzelden Altahawi.
Meenavalli also issued tens of thousands of restricted shares to Penumarthi and Tammineedi. The SEC explains that the scheme violated existing federal securities laws that specifically forbid the trading in unregistered shares distributed to persons affiliated with the company.
Robert Cohen, Chief of the SEC Enforcement Division’s Cyber Unit, said the quick actions of the agency prevented the illicit profits from going offshore:
“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country.”
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