US watchdog reckons blockchain bods Longfin were wrongfin, maybe this is their swansongfin

SEC cops crash crypto coin creeps' alleged crime caper

This is the blockchain. Yes, THE blockchain

US financial watchdog the SEC has frozen $27m in what it believes are ill-gotten gains generated by a shady cryptocurrency deal.

The regulator has accused blockchain tech upstart Longfin Corp and four of its officers of awarding and then selling unregistered shares for their own gain. The group is accused of violating the US Securities Act of 1933.

According to the SEC's complaint [PDF], Longfin CEO Venkata Meenavalli and execs Andy Alrahawi, Suresh Tammineedi, and Dorababu Penumarthi violated SEC rules in 2017 when they created and then resold 2 million restricted shares

The SEC says that the shares were awarded by Meenavalli to the three execs shortly before Longfin announced it would be acquiring Ziddu.com, a cryptocurrency business that was almost entirely owned by Meenavalli.

The subsequent hype over the biz gobble, and a move into cryptocurrency trading, would drive New-York-based Longfin's stock price from $9.76 per share to a high of $142.82, rocketing the value of the just-awarded shares.

Unfortunately, the SEC says, those shares were never actually registered with the regulator for sale, and as restricted shares they were not eligible for sale when, between December and March, they were sold by the group to net a gain of $27m.

The SEC began its investigation of the company, and, on April 4, filed suit against the Longfin and the four execs for violating Exchange Act rules against the sale of unregistered securities.

The watchdog also obtained the court order freezing the $27m made from the stock sale. The SEC said the freeze was necessary to keep the money from being shifted out of the country, and away from its jurisdiction, while the investigation and subsequent case are unfolding.

The case is the latest to be brought by the SEC's Cyber Enforcement Unit. Created last year to police the booming cryptocurrency financial markets, the unit has focused largely on busting up scams related to initial coin offerings and securities dealings online. ®

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