The Securities and Exchange Commission has announced that it obtained a court order freezing more than $27 million in trading proceeds from allegedly illegal distributions and sales of restricted shares of Longfin Corp. stock. The SEC’s complaint explains that shortly after Longfin began trading on the NASDAQ and announced the acquisition of a supposed cryptocurrency business, the company’s stock price rose significantly and its market capitalization exceeded $3 billion.
The SEC alleges that Suresh Tammineedi, Dorababu Penumarthi, and Amro Izzelden “Andy” Altahawi then illegally sold large amounts of their restricted Longfin shares to the public. Through the sales, the three men collected a combined total of more than $27 million in profits. The SEC’s complaint also alleges that Longfin’s CEO and controlling shareholder, Venkata Meenavalli, caused the company to issue more than two million unregistered, restricted shares to Altahawi and tens of thousands to Penumarthi and Tammineedi.
The sales of those restricted shares violated federal securities laws that restrict trading in unregistered shares distributed to company affiliates. The SEC’s complaint charges Longfin Altahawi, Meenavalli, Penumarthi, and Tammineedi with violating Section 5 of the Securities Act of 1933. Additional details have been made available here.