Press "Enter" to skip to content

Longfin Crypto Startup Scam Required to Refund $223 million

Longfin Corp., an independent finance and technology company is ordered to settle the investors in $223 million amount, update received from law360.com.

Longfin is now a defunct establishment whose share went up by 2000% via deceptive means in 2017 after acquiring an undervalued blockchain company.

In a default judgment, on July 29, from Manhattan, a federal judge of U.S. District, Denise L. Cote announced about the settlement and mentioned that the company has to pay $223 million-plus pre and post-judgment interest to the investors in connection with alleged securities fraud.

The scam took place in 2017 when Longfin tried to raise funds via an initial public offering.

To meet the requirements of Nasdaq listing, the company allotted around 409,360 shares of Longfin common stock to list itself on Nasdaq. Immediately after, the company acquired Ziddu.com- an undervalued blockchain company that proved quite successful to raise its stock price by 2000%.

During the same time, Longfin Corp. including its three main defrauders (CEO Venkata Meenavalli, CTO Vivek Ratakonda, and the director of two related companies, Suresh Tammineedi) started corning investors by making false statements about the company to pump company’s share price from $5 at listing to $144 per share in early 2018. 

However, the company went non-operational in Nov 2018 and the investors yet to get the repayment.

Earlier in Jan, the U.S. Securities and Exchange Commission in a press release said that-

“The SEC intends to establish a Fair Fund to distribute money received from the defendants to harmed investors.” 

Accusations Against Longfin Corp

After several numbers of allegations against the company by the investors, the SEC accused Longfin Corp along with the three Dupers on April 4, 2018.

“The SEC’s complaint alleged that Longfin Corp. and Meenavalli obtained qualification for a Regulation A+ offering by falsely representing in public filings that the company was managed and operated in the U.S. According to the complaint, Longfin and Meenavalli then distributed over 400,000 Longfin shares to Meenavalli’s affiliates and misrepresented the offering to Nasdaq to meet its listing requirements. The complaint also alleged that more than 90 percent of Longfin’s reported revenue for 2017 was fictitiously derived from sham commodities transactions.”

“The SEC filed a separate action alleging that Longfin Corp, CEO Venkata Meenavalli, CTO Vivek Ratakonda, and the director of two related companies, Suresh Tammineedi illegally distributed and sold more than $33 million of company stock in unregistered transactions.”