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Eugene

(61,592 posts)
Thu Jun 6, 2019, 12:44 AM Jun 2019

U.S. charges ex-CEO of cryptocurrency company Longfin with $66 million fraud

Source: Reuters

U.S. LEGAL NEWS JUNE 5, 2019 / 4:07 PM / UPDATED 2 HOURS AGO

U.S. charges ex-CEO of cryptocurrency company Longfin with $66 million fraud

Jonathan Stempel
3 MIN READ

NEW YORK (Reuters) - U.S. prosecutors said on Wednesday the former chief executive of Longfin Corp has been indicted for engineering an accounting fraud that inflated the revenue of the now-defunct cryptocurrency company by more than $66 million.

The securities fraud charge against Venkata Meenavalli, 49, of India, was announced 18 months after Longfin shares went on a roller-coaster ride as cryptocurrencies were coming into fashion, rising more than 13-fold over a few days and briefly making the company worth more than $3 billion.

Prosecutors said Meenavalli generated fraudulent documents that caused Longfin to report as revenue millions of dollars of commodities “transactions” that were actually “sham, round-trip events” between the company and entities he controlled.

U.S. Attorney Craig Carpenito in New Jersey said the more than $66 million of revenue should never have been recognized, and made Longfin shares look more attractive to investors.

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Read more: https://www.reuters.com/article/us-usa-crime-longfin/u-s-charges-ex-ceo-of-cryptocurrency-company-longfin-with-66-million-fraud-idUSKCN1T62J8

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Source: U.S. Attorney's Office - Southern District of New York

FOR IMMEDIATE RELEASE
Wednesday, June 5, 2019

CEO Of Public Commodities Trading Company Charged In $66 Million Accounting Fraud Scheme

Defendant Allegedly Inflated Company’s Revenue to Defraud Investors

NEWARK, N.J. – The CEO of a publicly traded commodities trading company has been indicted for allegedly orchestrating an accounting scheme to defraud investors and others by recognizing more than $66 million in fake revenue in the company’s public filings, U.S. Attorney Craig Carpenito announced today.

Venkata Meenavalli, 49, of India, was charged by indictment with securities fraud.

According to documents filed in this case:

In 2017 and 2018, Meenavalli and others orchestrated a multimillion-dollar accounting fraud relating to Longfin Corp., a publicly traded company purportedly engaged in sophisticated commodities trading and so-called “cryptocurrency” transactions, including “blockchain-empowered solutions.” In fact, Longfin did not engage in any revenue-producing cryptocurrency transactions, and did not use the blockchain to empower any solutions. Longfin reported as revenue millions of dollars of commodities transactions, which were actually sham events between Longfin and separate entities Meenavalli controlled, using phony bills of lading and other fraudulent documents.

Longfin fraudulently reported in its public filings with the U.S. Securities and Exchange Commission (SEC) more than $66 million of revenue that was never actually earned and should never have been recognized. By including this phony revenue in the company’s public filings, Meenavalli and others made Longfin’s shares more attractive to potential investors.

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Read more: https://www.justice.gov/usao-nj/pr/ceo-public-commodities-trading-company-charged-66-million-accounting-fraud-scheme
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