Venkata Meenavalli, former CEO of Longfin Corp. has finally settled with the U.S. Securities and Exchange Commission (SEC) according to a statement issued by the Commission earlier in January 2020. Longfin was one of the companies that made a pivot into blockchain and crypto during the 2017 bull run.
Meenavalli to Pay $400,000 in Disgorgement Penalty to SEC
According to the SEC’s press release, Meenavalli has reached an agreement with the Commission to pay a $400,000 disgorgement penalty. The ex-Longfin CEO reportedly agreed to the settlement without entering any plea against the charges brought by the SEC.
The agreement, which is subject to approval by the courts, will conclude one part of the SEC’s fraud case against Meenavalli and Longfin. If the courts uphold the settlement agreement, the former Longfin CEO will disgorge his full salary as head of the company, which amounts to $159,000.
Meenavalli will also pay $232,000 in civil penalties and an additional $9,000 as prejudgment interest. As part of the settlement, Meenavalli will also have to give up all Longfin shares and be permanently banned from acting as a director of any public company.
Back in mid-2019, BTCManager reported that the ex-Longfin CEO had been charged by prosecutors for securities fraud. According to Anita Brandy of the SEC’s Enforcement Division:
“As alleged in our complaint, Meenavalli abused the Reg. A+ process to conduct a fraudulent offering, list Longfin on Nasdaq, and entice investors with falsified revenue. The SEC staff’s quick actions exposed the full scope of Meenavalli’s fraud and resulted in additional monetary and prophylactic relief to prevent him from defrauding U.S. investors in the future.”
Longfin allegedly falsified its financial standing by inflating 90 percent of its revenue in 2017. The company then proceeded to sell about 400,000 of its shares, utilizing its Regulation A+ status to act as a trusted investment opportunity.
SEC Recovers $33 Million From Longfin
Meenavalli is also a defendant in another SEC case along with Longfin and three other co-defendants for the distribution of illegal shares that saw the company earn about $33 million. As previously reported by BTCManager, the courts froze company assets worth $27 million back in May 2018.
According to the SEC, the Commission was able to secure a $26 million disgorgement against the three other co-defendants. In October 2019, the SEC also obtained another favorable judgment ordering Longfin to pay a $6.8 million fine for fraud.