SEC Demands Telegram’s ICO Allocations

Venkata S. Meenavalli, CEO of the cryptocurrency firm Longfin, has agreed to settle with the Securities and Exchange Commission (SEC) and pay $400,000 in disgorgement and penalties, the SEC announced on Friday (Jan. 3).

The SEC charged that Longfin and Meenavalli falsified more than 90 percent of Longfin’s reported revenue for 2017 and made up other details in the company’s IPO paperwork, the SEC said in public filings

Meenavalli agreed to settle the case without admitting or denying the charges. The SEC is setting up a Fair Fund to distribute money received to harmed investors. 

“The SEC staff’s quick actions exposed the full scope of Meenavalli’s fraud and resulted in additional monetary and prophylactic relief to prevent him from defrauding U.S. investors in the future,” said Anita B. Bandy, associate director of the division of enforcement.

Regulators are moving forward with a criminal case against Meenavalii. 

The SEC asked a New York federal judge on Thursday (Jan.2) to force the encrypted instant messaging app Telegram to turn over financials and explain how it spent $1.7 billion from its 2018 initial coin offering (ICO), Coindesk reported

The SEC is alleging that the funding Telegram raised selling Gram tokens constituted an unregistered securities sale.

The SEC’s initial complaint in October alleges that Telegram and its wholly-owned subsidiary TON began raising capital in January 2018 to finance the companies’ business, including the development of its own blockchain, the “Telegram Open Network” or “TON Blockchain,” as well as the mobile messaging application Telegram Messenger. 

“Plaintiff respectfully moves to compel Defendants to answer questions and provide documents regarding the amounts, sources, and use of funds raised from investors in connection with the unregistered sale of securities at issue in this case,” the court filing by the plaintiff stated.

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