SEC freezes Longfin (LFIN)
The U.S. Securities and Exchange Commission obtained an emergency freeze of $27 million in trading profits involving the CEO of cryptocurrency company Longfin and three other people, the agency said in a statement Friday.
Longfin’s stock was halted on the Nasdaq as of 10:01 a.m. ET on the SEC alert after jumping more than 47 percent. Shares had been halted numerous times throughout the week for volatility. The stock was worth more than $3 billion at one point in December after the company announced a cryptocurrency-related acquisition.
“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” Robert Cohen, chief of the SEC Enforcement Division’s Cyber Unit said in the statement. “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.”
The SEC claims Longfin CEO and Chairman Venkat Meenavalli had the company issue unregistered shares to the three people so they could sell them, which they did.
The financial watchdog does allow people to own a certain amount of unregistered shares without having to go through what one lawyer calls a “very long” registration process. But those shares are restricted and cannot be sold during certain time periods.