Longfin CEO Tries To Defend Company: Shorts Are 'Going To Destroy Us'

The bizarre story of Longfin Corp LFIN continued on Wednesday evening when CEO Venkat Meenavalli made a return appearance on CNBC for the first time since his controversial interview back in December.

Background

The story starts in December when Longfin acquired blockchain business Ziddu.com during the height of the cryptocurrency/blockchain fever. Following the acquisition, Longfin’s share price exploded, and its market cap ballooned to $2.8 billion.

On Feb. 14, FTSE Russell announced it would include Longfin in both its Russell 2000 and Russell 3000 indices. In order to qualify for inclusion in the Russell indices, a company must have a float of shares available to trade of no less than 5 percent of the total shares outstanding. Longfin’s December IPO placed only about 1.14 million shares, about 2.5 percent of its total number of outstanding shares.

Not So Fast

On March 26, FTSE released a statement saying that a Feb. 13 filing from Longfin confirmed only 1.14 million public shares.

“In accordance with the FTSE Russell Recalculation Policy and Guidelines, Longfin will therefore be removed from the Russell Indexes on 28 March 2018 (after the close),” FTSE said.

Following news of its exclusion from the Russell indices, the stock has tanked by more than 80 percent in less than two weeks.

From Bad To Worse

To make matters worse, Longfin disclosed on Wednesday it's under investigation by the SEC.

In his latest interview, Meenavalli said Longfin isn't the only blockchain-related company the SEC is investigating and that Reg-A companies like Longfin have no obligation to follow GAAP guidelines. He also said “every disclosure is there” when asked about Stampede Capital and the transfer of Longfin shares to his wife.

"I'm not going to sell the next three years," he said of his shares.

He reiterated that Longfin’s valuation has no business being in the $5 billion to $10 billion range, but said the market should decide what is appropriate.

Meenavalli also said he's fighting against short sellers, who are “going to destroy us” and plans to write to the SEC and FINRA to ask for help. Check out the full CNBC interview here.

Longfin stock was little changed in pre-market trading on Thursday. About 20 minutes after the opening bell, however, the stock was halted on a circuit breaker after spiking up nearly 50 percent.

At time of publication, Longfin's stock was trading around $17.22, up 48 percent on the day.