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Longfin CEO agrees to settle SEC fraud action for $400,000

Celia Wan

Cryptocurrency firm Longfin Corp. CEO has agreed to settle with the Securities and Exchange Commission (SEC) over the charges of fraudulent public offering and falsifying revenues. 

Per an SEC statement dated Jan. 3, Venkata Meenavalii has agreed to pay $400,000 in disgorgement and penalties, although the settlement still awaits court approval. 

If approved, Meenavalii will disgorge the $159,000 he received as Longfin CEO, as well as pay $9,000 in prejudgement interest and $232,000 in civil penalties. The settlement money may be distributed back to harmed investors, according to the regulator. 

Meanwhile, the U.S. Attorney's Office continues to pursue a separate criminal action against Meenavalii, according to the announcement. 

Longfin and Meenavalii were charged by the SEC for falsely representing in its SEC filings that the company was managed and operated in the U.S. when its operations, assets, and management remained offshore. The company also recorded more than $66 million in fictitious revenue from sham commodities transactions, the regulator alleged. 

In September, the SEC obtained a default judgment against Longfin Corp from a federal court in New York, which asked the firm to pay about $6.8 million in penalties and disgorgement. The regulator is continuing its investigation, the announcement stated. 

Longfin was one of a number of firms in the past year and a half that sought to drive investor interest by tying their business operations to blockchain applications.