SEC Obtains Preliminary Injunction Continuing Freeze of $27 Million in Stock Sales of Purported Cryptocurrency Company Longfin
Litigation Release No. 24130 / May 2, 2018
Securities and Exchange Commission v. Longfin Corp., et al., Case No. 18-cv-2977 (DLC) (S.D.N.Y., filed April 4, 2018)
On May 1, 2018, a federal district court in Manhattan granted the Securities and Exchange Commission's motion for a preliminary injunction, extending until the conclusion of the case the emergency order previously entered by the court 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 Chief Executive Officer, Venkata S. Meenavalli, and three affiliated individuals, Andy Altahawi, Dorababu Penumarthi, and Suresh Tammineedi.
The Court's order enjoins Defendants Altahawi, Penumarthi, and Tammineedi from dissipating assets pending final disposition of the case, and states, "[t]he SEC has carried its burden of showing a likelihood of success of proving at trial that the three defendants violated Section 5 in selling their shares."
The SEC's litigation against Longfin, Meenavalli, Altahawi, Penumarthi, and Tammineedi is ongoing. The complaint charges the Defendants with violating Section 5 of the Securities Act of 1933 and seeks injunctive relief, disgorgement of ill-gotten gains, and penalties, among other relief. According to the complaint, Longfin's CEO and controlling shareholder, 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. Shortly after Longfin began trading on NASDAQ and announced the acquisition of a purported cryptocurrency business, Altahawi, Penumarthi, and Tammineedi illegally sold large blocks of restricted Longfin shares to the public while the stock price was highly elevated, for profits in excess of $27 million.
The litigation is being led by Kevin Lombardi and Sarah Heaton Concannon and supervised by Stephan Schlegelmilch. The SEC's continuing investigation is being conducted by Ernesto Amparo, Robert Nesbitt, and Adam B. Gottlieb and supervised by Anita B. Bandy and Robert A. Cohen, Chief of the SEC's Cyber Unit.
For further information, see Press Release No. 2018-61, Apr. 6, 2018; Litigation Release No. 24106, Apr. 9, 2018; and Complaint, Apr. 4, 2018. Anyone with information about potential securities law violations involving Longfin may contact us by emailing firstname.lastname@example.org.