At Crypto Scam Sniffer, we’re not here to harm the cryptocurrency sector. In fact, we think that cryptocurrency is a great advancement in both, the technology and the financial spaces. That’s actually why we started the website in the first place. Ultimately, we want to protect cryptocurrency traders, users, and enthusiasts, while protecting the industry as a whole. That’s why we hate it when we see companies like Longfin.
Longfin is a publicly traded company trading under the ticker LFIN on the NASDAQ. On December 12, 2017, the stock started trading on the public market at a price of $5.00 per share and quickly went on a monumental rise, peaking out at $72.38 per share just a few days later on December 17th. Since then, the stock has been all over the place, and more recently, the stock has fallen dramatically, bottoming out at $9.89 on April 3, 2018 before going on another impressive run in the market that is happening today. Below, we’ll talk about:
- What Longfin claims to be;
- why this company gives the cryptocurrency industry a bad name;
- and what we’ll be watching for ahead.
What Longfin Claims To Be
Longfin claims to be a FinTech company focused in the world of cryptocurrency blockchain. According to their website, the company has various products, ranging from cryptocurrency-related financing to market making, intermediation, smart contracts, and blockchain enabled treasury management.
Why The Company Gives Cryptocurrency A Bad Name
Longfin claims to be an important part of the cryptocurrency sector. However, the company actually used the blockchain as a way to use the public market like an ATM. The company doesn’t really have much, but is trading at a valuation of $2.1 billion. Let’s break this down a bit shall we:
- A Valuation At $21 Million Is More Like It – The only reason that Longfin has garnered such a massive valuation has to do with the fact that it is in an emerging market, and one of the most popular to date at that. At the end of the day, blockchain companies have been flying in the market, even if they shouldn’t be. Digging into the company’s financial data, we believe that a valuation of $21 million is closer to what the company deserves, not $2.1 billion! In 2017, the company generated revenue in the amount of $75 million. Sounds great right? Well, not really, when you look at the net loss of $26.4 million. At the end of the day, the company is hemorhaging money. Considering this and other factors, a more reasonable valuation for the company is at $21 million, and we may be giving the company a bit more credit than it deserves here.
- CEO & CFO Ditch The Company Pre-IPO – When looking at the management team at Longfin, even more issues start to emerge. Just take a look at the CEO and CFO of the company. At the moment, the team in charge is not the same team as the pre-IPO team, which begs the question… Why would the head hancho’s in charge dart out of the company just before it makes it big and goes public? The answer is yet to be known, but it’s not likely for a good reason.
- Filings – In general, when privately held companies hit the public market, they are nearly in constant communication with the investing public. They want investors to know that things are going well and to have faith in what they are doing. That doesn’t seem to be the case at Longfin. Thus far, the company has done little more than provide the minimal required regulatory filings to its investors.
- SEC Investigation – At the moment, there is an SEC investigation into Longfin due to the lack of information provided to investors. In fact, the filings and press releases offered by the company may be riddled with fraud! The SEC will figure this out!
- Recent Interview With CNBC – Finally, in a recent interview with CNBC, Venkat Meenavalli, CEO and Chairman at Longfin made some controversial statements. During the entire interview, Meenavalli was somewhat elusive when it comes to questions about his filings. He kept pointing to the fact that this is a small company, not a big company; but don’t forget, the $2.1 billion market cap says otherwise. He then tried to defend his omissions and misleading data by pointing to the fact that the IPO filing was not an S-1. Moving on, he complained about short sellers and said he would hold his shares for a minimum of 3 years. Nonetheless, the entire interview seemed to show the illegitimacy of the company.
What We’ll Be Watching For Ahead
Moving forward, the Crypto Scam Sniffer team will be watching Longfin incredibly closely. We’re most interested in following the SEC investigation to see if charges are brought up and where the stock ends up following the close of the investigation. Nonetheless, we’ll keep watching and bring updates to you as we have them!