Longfin’s Illegal Trading Was an Easy Catch for the SEC
The US Securities and Exchange Commission has gotten a court order to freeze $27M in trading proceeds because of allegations that restricted shares of Longfin Corp. (NASDAQ:LFIN) stock may have been illegally sold and distributed. The regulator’s complaint, unsealed in federal court early this month, contends that soon after the company started trading on the NASDAQ and made it known to the public that it was acquiring a purported cryptocurrency business, its stock price soared from $5 to $142 during the first three trading days, with market capitalization reaching over $3B, said the SEC. Barron’s, however, reports market cap reaching $6B. The SEC is charging Longfin CEO Venkata Meenavalli and Director Amro Izzelden “Andy” Altahawi, as well as Suresh Tammineedi and Dorababu Penumarthi, with violating the Securities Act of 1933.
According to the regulator, Altahawi, Penumarthi, and Tammineedi illegally traded and sold huge blocks of the restricted shares to members of the public while Longfin’s stock price was very high. As a result, the three of them collectively made over $27M. A lot of the trading hype seems to have come from the cryptocurrency and/or blockchain connection with the announced acquisition.