Longfin Rides Lies All The Way To The Nasdaq and Robs $33M
If you’ve been in the markets long enough, you should know there is a lot of shady activity that goes on in the markets… no matter where you look, there are scummy players. The thing is, I like to look into these players to see how they operate.
That way, I can figure out what’s going on, and legally profit from their greed.
I’ve come across an interesting story about Longfin — a blockchain company — that everyone and their brother wanted in on at one point. Little did they know, the company was riddled with people who would stop at nothing.
CEO and Founder Venkata S. Meenavalli took his company Longfin (LFIN) on a rollercoaster ride. The company went from being listed on the prestigious Nasdaq exchange… and actually traded for more than $140 a share at one point.
After the CEO’s fraudulent activity, Longfin had to head on over to the wild wild west — the OTC Markets — where the stock currently struggles to stay above the price of an off-brand canned soda.
What was his total score? A whopping $33 million in sales of shares at “zero” cost. What the CEO didn’t know was the fact that the SEC hunts down shady execs to help investors.
Of course, that’s not how things were planned…
Longfin’s goal was to trade on the Nasdaq. While many movies and books talk up the “do whatever it takes” ideology, that isn’t the way to go when you don’t want the SEC to slap you with charges.
Here’s how the tides turned for Longfin.
Longfin distributed 400,000 shares to people close or affiliated with the company to create the illusion there were bona fide investors interested in LFIN.
However, these investors never had to pay for these shares… talk about a free lunch.
So why did they distribute these shares out?
They wanted to falsely inflate investor numbers because that’s one requirement to be listed on a major exchange.
Longfin added another layer of complexity to this scheme. You see, it was crucial for Longfin to qualify for the SEC’s Regulation A guidelines — the company had to be based in the U.S. or Canada.
Get this: Longfin claimed that it was based in New Jersey and New York but never operated or managed in the US! The company even placed all management, cash, assets, and records exclusively outside the US.
After meeting some of the requirements, Longfin needed to be trading over $5 a share. To do so, Longfin used the same plan: distributing shares to insiders and company affiliates that not one single person paid for.
Thereafter, LFIN was finally listed on Nasdaq. Longfin bought Ziddu.com a cryptocurrency business… which surprise surprise, 92% of Ziddu was owned by no other than the CEO and founder of Longfin, Venkata S. Meenavalli.
Longfin’s Stock Manipulation
This actually hyped up the stock because this was going on during the whole cryptocurrency craze. However, Ziddu.com actually had zero actual value. The company had no revenue, no physical facilities, no employees even, basically were a big nothing with a side of nada.
But this acquisition did one thing and it was the key to everything.
The acquisition launched Longfin’s stock price to $142.82 per share, which was perfect for the insiders and company affiliates. They had tons of shares they never even spent a penny on, and they just had to sell their shares.
Here’s the kicker: they made millions of dollars off the spike from Ziddu.com. Longfin, Meenavalli, and 3 affiliates made more than $33 million from selling their essentially “free” Longfin shares.
It wasn’t enough for these schemers after they raked in $33M. Instead, they moved onto accounting fraud. The company falsified purchases, sales, shipments — all to create the impression of revenue-generating transactions. By doing this they created $66 million of fake revenue, which at the time, amounted to 89% of the total revenue for Longfin.
Longfin and Meenavalli made false report after false report and publicly disclosed its revenue
In 2018 Longfin tapped out.
It disclosed to its board directors that operations would cease, and liquidation of assets would begin. Longfin filed that its liabilities far exceeded its assets (no duh). It didn’t have enough cash to meet obligations. Not only that, but the company anticipated that there would be no recovery for shareholders.
Longfin, Meenavalli, and the 3 affiliates that helped him will be paying a settlement of $26M for their ill-gotten gains. The SEC hopes to distribute the settlement to the investors these jerks royally screwed over on their way to get themselves millions.
Meenavalli will also be required to turn over every share of Longfin. He will be permanently barred from acting as a director or officer of any public company. He will also be banned from participating in the sale or offering of penny stocks.
Yes, You Can Profit Off Shady Activity
The thing is, if there’s shady activity going on in a major exchange in Nasdaq… imagine what goes down in the dark pools.
Just check out a recent trade I had in Virgin Galactic (SPCE).
Not too long after, the Halftime Report crew featured the trade in SPCE!
Guess what happened with the stock that day?
The thing is, the CNBC Halftime Report crew was a little behind… we spotted the trade before it even got a mention!
Since I was sitting in some hefty profits, I decided to take some off the table…
But I wasn’t the only trader out there wise enough to lock in the profits… many of my clients crushed the trade too!
Just sold SPCE calls for +36% Thx Taylor! ~ Gary T.
Same here Gary out SPCE +38%, Thanks Taylor ~ Dave
same here for 40%, excellent… ~ Lee
+50% on SPCE ~ Robert
Heck, I was able to lock in +50% gains on half the trade in under three hours… and I will continue to down big-money block trades that go off in Wall Street’s mysterious dark pools… and then using those “hidden” smart-money signals to collect quick profits from fast stock moves.
With earnings season coming up, I think we’ll see much more activity going off in the dark pools… and I’ll be stalking these trades — waiting for the right time to pounce.
If you want to learn how you can profit off Wall Street’s greed, click here to watch this exclusive training lesson.