SEC Granted Emergency Freeze of $27 Million in Longfin’s Shares

Things have gotten worse for Longfin (NASDAQ:LFIN) as the US Securities Exchange Commission (SEC) obtained on Friday (April 6) an emergency court order freezing $27 million in stock sales of the company.

According to the court documents, illegal trading and sales of restricted shares of the company had taken place between the company’s CEO, Venkat Meenavalli, and three other people between December 2017 and February 2018.

The SEC said in its statement that following the company’s acquisition of a cryptocurrency business (Ziddu.com, a blockchain solutions provider), Longfin’s share price “rose dramatically” while its market cap soared past the $3-billion threshold.

“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” Robert Cohen, chief of the SEC enforcement division’s cyber unit, said in the release. “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.”

The SEC’s complaint further details that Longfin’s CEO had the company issue more than 2 million unregistered and restricted shares to Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi and Suresh Tammineedi to sell them, resulting in a violation of federal securities laws.

In December, after Longfin announced the acquisition of Ziddu.com, the company’s share price surged from $5.39 to $72.38 in just four days — representing a 1,242.85-percent increase. Longfin disclosed earlier in the week the SEC’s investigation into the company, which sent its share price tumbling 28.8 percent from Monday (April 2) to $11.58 on Wednesday (April 4).

By Friday Longfin’s share price had increased more than 47 percent to $28.34, before having its shares halted.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.