Longfin

From CryptoMarketsWiki
Jump to: navigation, search
Longfin Corp
Founded 2017
Headquarters New York, NY; Lyndhurst, NJ
Key People Vankata S. Meenavalli, CEO; Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi, and Suresh Tammineedi
Products Alternative financial services
LinkedIn Profile
Website Longfin Homepage

Longfin is a New York-based blockchain trading company that has been charged of fraud by the SEC.[1][2]

Overview

At the end of Q1 for 2018, Longfin publicly reported revenue of $54 million - mostly from trading physical commodities ($53 million), with an additional $1.61 million profit earned from fees that Longfin charged third parties for using its "proprietary risk management and trading infrastructure technology." It also reported operating expenses of $51 million directly related to selling physical commodities, $1.16 million in fees related to technology revenue, $1.56 million of amortized expenses related to intangible assets acquired by Longfin during this period, $0.7 million in computer maintenance costs, and $2 million in operational and administrative expenses, including legal and professional fees, as well as $300,000 in employee compensation and payroll taxes. Combined, this translated to a $7.4 million net loss, according to Longfin's financial report.[3]

Fraud allegations

In December of 2017, Longfin launched a "mini-IPO" under Reg A+ rules. Shares of its stock, originally priced at $5 per share on Nasdaq, increased to $142 per share after Vankata S. Meenavalli, Longfin's CEO, acquired Ziddu.com, a cryptocurrency business. In 2018, the SEC asked a federal judge in Manhattan to freeze $27 million of Longfin's funds, which the SEC said were proceeds from illegal sales of stock shares under the ticker symbol LFIN.[4] The SEC said that prior to the acquisition, Ziddu.com had no ascertainable value, producing no revenue and possessing no physical, technological, intellectual property, or personnel-related assets. The SEC said that during the IPO, Longfin employees and/or executives made sales of stock that were unregistered, and thus illegal.[5] In January 2019, a default judgment was entered against Meenavalli and his associates, Amro Altahawi, Dorababu Penumarthi, and Suresh Tammineedi.[6]

In June 2019, the SEC filed fraud charges against Longfin and Meenavalli. In doing so, the SEC amended their original accusation, saying that the agency now alleged Longfin committed a "multi-pronged" fraud scheme that included falsified revenue, misrepresentation to the SEC, and false statements to Nasdaq, that the company had fabricated 90% of its revenue and sold over 400,000 shares of Longfin stock, but that Longfin did not have the funds to back, and that although Longfin's A+ offering took place based on the company's assertion that it was a U.S.-based company, though the company's operations, assets, and management were all offshore. The complaint also said that Meenavalli had engaged in insider trading, selling $2 million worth of unregistered shares to his consultant Altahawi and tens of thousands of dollars worth of shares to Penumarthi and Tammineedi. As well as the SEC, the U.S. Attorney’s Office for the District of New Jersey also announced on June 5 that it was pursuing criminal charges against Meenavalli.[7][8]

Products and Services

Longfin Corp describes itself as a "global fintech company powered by artificial intelligence and machine learning," and a subsidiary of Longfin Tradex Pte. Ltd. It describes its primary service as being a provider of alternative financial services, including forex trading for importer/exporters. The report also claims ownership of Ziddu.com, a smart contracts marketplace based off of the Ethereum blockchain.[9]

Key People

  • Vankata S. Meenavalli, CEO
  • Amro Izzelden “Andy” Altahawi, consultant to Meenavalli
  • Dorababu Penumarthi
  • Suresh Tammineedi

References