Longfin urged investors to pay $ 223 million

A federal judge in Manhattan ruled that Longfin, a now closed company whose shares rose 1000% in 2017 after buying an undervalued cryptocurrency company, You must pay USD 223 million plus interest to investors for alleged security fraud.

In a decision of July 29, Judge Denise Cote determined that Longfin, its managing director, Venkata Meenaalli, the chief technology officer, Vivek Ratakonda, and the chief executive officer of two related companies, Suresh Tammineedi, jointly owe him the above amount .

The judgment granted a default judgment, which the main plaintiff Mohammad Malik requested in January. Malik’s argument was based on a request from Longfin’s attorney to withdraw from the case in December 2018, and found that it was no longer “in the interest of Longfin Corp’s creditors” to continue to fight the case.

Longfin urged investors to pay $ 223 million
Longfin urged investors to pay $ 223 million

Judge Cote’s order stated that Malik “offered sufficient evidence through statements and evidence submitted to substantiate his claim for damages, adding that “a hearing of evidence is not required”.

Longfin receives approval for a “mini IPO”

September 2017 Longfin started its IPO or IPO as an offer under Regulation A +, with which the company can raise funds from both accredited and non-accredited investors and is also exempt from many registration requirements. the Stock Exchange Act of 1934.

Longfin completed its $ 27 million IPO on December 8, 2017, announcing that it “is the first financial technology company to be listed on Nasdaq under Reg A +”. In the same month, Longfin announced it had bought, a cloud storage platform that was said to have become a “provider of blockchain technology solutions”. As reported by Cointelegraph in December 2017, Longfin’s shares rose more than 1,000 percent after the news was announced.

Shareholders quickly accused Longfin and his executives of making false and misleading statements that raised their share price from $ 5 through trading to $ 140 in early 2018.

Allegations that employees of the company had sold Longfin shares triggered an investigation by the U.S. Securities and Exchange Commission in April 2018, which led to a rapid decline in shares.

SEC takes action against Longfin

September 2019 The SEC received a $ 6.8 million verdict against Longfin, and a federal court in New York found the company had fraudulently qualified for its A + offer.

The ruling found that the company had incorrectly claimed to operate primarily in the United States, misrepresented the number of qualified shareholders and shares sold under the offering, and booked $ 66 million in “bogus proceeds from counterfeit goods transactions”. 90% Longfin’s alleged income.

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