Articles Tagged with cryptocurrency investigation

The Securities and Exchange Commission has 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 involving the company, its CEO, and three other affiliated individuals. According to the SEC’s complaint, Longfin’s founding CEO and controlling shareholder, Venkata Meenavalli, caused the company to issue more than two million unregistered, restricted shares to Altahawi, who was the corporate secretary and a director of Longfin, and tens of thousands of restricted shares to two other affiliated individuals, Penumarthi and Tammineedi, who were allegedly acting as nominees for Meenavalli. The subsequent sales of those restricted shares violated federal securities laws that restrict trading in unregistered shares distributed to company affiliates.

The Complaint alleges that shortly after Longfin began trading on NASDAQ and announced the acquisition of a purported cryptocurrency business, its stock price rose dramatically and its market capitalization exceeded $3 billion. The SEC alleges that Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi, and Suresh Tammineedi then illegally sold large blocks of their restricted Longfin shares to the public while the stock price was highly elevated. Through their sales, Altahawi, Penumarthi, and Tammineedi collectively reaped more than $27 million in profits.

“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” said Robert Cohen, Chief of the SEC Enforcement Division’s Cyber Unit.  “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.” The SEC’s complaint, which was filed under seal on April 4, charges Longfin, Meenavalli, Altahawi, Penumarthi, and Tammineedi with violating Section 5 of the Securities Act of 1933. The complaint seeks injunctive relief, disgorgement of ill-gotten gains, and penalties, among other relief.

Bitcoins are gaining popularity across the globe, but they are also attracting the attention of the U.S. Securities and Exchange Commission. The SEC has handed down subpoenas to cryptocurrency projects like TechCrunch. According to Bitcoinist, the $100 million cryptofund is now under investigation. The investigation hints at the overall trepidation of governments around the world toward the cryptocurrency exchange.According to the site, TechCrunch founder Michael Arrington and his cryptocurrency fund have been subpoenaed, but Arrington says they aren’t the only company to come under investigation.He told CNBC on Thursday, “We received a subpoena. Every [crypto]fund I’ve talked to has received one. That’s fine. They just have to figure out what they want. They need to set up rules so we can all follow them, and the market is begging them for that.”

Just what the SEC is looking for seems to be a mystery. In the past, the commission has indicated that regulations in regards to securities laws do not apply to digital coins. The confusion is appearing to have a domino effect as cryptocurrency firms ban U.S. investors from projects, seemingly worried about further scrutiny. What is clear is that there is a nation-wide investigation through the SEC’s New York, Boston, and San Francisco which have issued multiple subpoenas, in “an attempt to learn as much as possible” about the fast-growing billion-dollar industry. The multiple investigations are leading those in the industry to believe it’s a coordinated and wide-reaching investigation

 The US is not the only country trying to leverage a certain amount of control over the cryptocurrency business. According to the article, South Korea still has mass confusion over the entire process, while China has banned Initial Coin Offerings and European financial authorities are calling for an all-out stop to cryptocurrency investments.Why are countries so concerned? Well it’s the very nature of cryptocurrency itself. Cryptocurrency transactions are encrypted. They can be tracked to a certain extent, but they provided a way to keep money and transactions secretive and out of sight for regulators.There is a certain risk the funds could be used to fund criminal activity or terrorism. Plus, they can be used to circumvent capital controls as companies investing in cryptocurrency could avoid taxes, penalties, and even possible seizure if a government suspects wrong doing.