Longfin CEO Charged by Prosecutors for Propping up Books
Longfin, a FinTech company specializing in structured trade solutions, was previously charged by the SEC for securities fraud and froze $27 million worth of assets. In a press release, the SEC revealed they are now charging ex-CEO, Venkata Meenavalli, with cooking the books and faking 90 percent of the company’s revenue, June 5, 2019.
SEC in Overdrive
The SEC has put its prosecuting boots on as it prepares to stamp its authority over the world of digital assets. For some time, cryptocurrency firms have been working in an unregulated market, thus making it easier for them to get away with certain activities, good or bad.
In a sudden move, the SEC has revealed Meenavalli propped up the books with $66 million in revenue that never should’ve been recognized. The SEC won its judgment against Meenavalli and three associates of his for whom he had arranged the issuance of shares.
In 2017, the company redirected it’s s business model to focus on blockchain and cryptocurrency; they used a misleading acquisition announcement to prop up the price of their shares and dump it into the market. At one point, Longfin was $3 billion market cap company, sinking to $67.1 million at the time of writing.
The previous complaint against Longfin claimed the company was given A+ regulation in light of their operation being managed from the US, whereas in reality the company’s operations and assets were all offshore. The SEC has stepped up its efforts to enforce regulations on cryptocurrency companies, with the recent suit against Kik making global headlines.
The debate of cryptocurrency regulation has carried on into 2019 as the general community is undecided on what is the best option. On one hand, people argue that regulation allows the system to become legitimate and reduces the scope of criminal use of cryptocurrency.
The other, more anarcho-capitalist side, believes regulation doesn’t matter because governments cannot control what happens on a decentralized network anyway.
Both points have their own set of merits, but it seems the majority lean toward regulation. Authorities themselves seem quite unsure as to how they should tackle and regulate cryptocurrency.