SEC Charges Tingo Mobile Founder with "Massive" Scheme to Fabricate Financial Statements

SEC Charges Tingo Mobile Founder, Three Companies with Massive Fraud and Seeks Emergency Relief

The Securities and Exchange Commission today announced charges against Mmobuosi Odogwu Banye a/k/a Dozy Mmobuosi and three affiliated U.S.-based entities of which he is the CEO–Tingo Group Inc., Agri-Fintech Holdings Inc., and Tingo International Holdings Inc.–in connection with an alleged multi-year scheme to inflate the financial performance metrics of these companies and key operating subsidiaries to defraud investors worldwide. The SEC is seeking emergency relief to prevent Defendants’ continued dissemination of materially false information to investors and to protect corporate and investor assets.

The SEC’s complaint, filed on December 18, 2023, alleges that, since at least 2019, Mmobuosi spearheaded a scheme to fabricate financial statements and other documents of the three entities and their Nigerian operating subsidiaries, Tingo Mobile Limited and Tingo Foods PLC. The complaint further alleges that Mmobuosi made and caused the entities to make material misrepresentations about their business operations and financial success in press releases, periodic SEC filings, and other public statements. For instance, Tingo Group’s fiscal year 2022 Form 10-K filed in March 2023 reported a cash and cash equivalent balance of $461.7 million in its subsidiary Tingo Mobile’s Nigerian bank accounts. In reality, those same bank accounts allegedly had a combined balance of less than $50 as of the end of fiscal year 2022. According to the SEC’s complaint, Defendants also fabricated the customer relationships that formed the basis of their purported businesses. The complaint alleges that Mmobuosi and the entities he controls have fraudulently obtained hundreds of millions in money or property through these schemes, and that Mmobuosi has siphoned off funds for his personal benefit, including purchases of luxury cars and travel on private jets, as well as an unsuccessful attempt to acquire an English Football Club Premier League team, among other things.

The ‘Eddie Murphy Rule’ Earns Its Moniker: The CFTC Brings a Classic Insider Trading Case

On December 14, 2023, the U.S. Commodity Futures Trading Commission entered into a settled action with a global commodities merchant with oil and gas trading operations. In a parallel action, that commodities merchant entered into a deferred prosecution agreement with the U.S. Department of Justice for Foreign Corrupt Practices Act violations.

This case marks a significant milestone in the CFTC’s enforcement of insider trading in the commodities markets. While prior cases resembled front-running cases, this action establishes the CFTC’s intention—and ability—to pursue the type of insider trading cases commonly brought in the securities space. The CFTC found that for more than six years, the commodities merchant paid a consultant who bribed employees of a South American state-owned enterprise, which the settled order refers to as “SOE A,” for confidential company information. Although the information related to physical oil trading, the CFTC linked the trading to conduct that occurred in markets for related futures and other derivatives, thereby establishing its jurisdiction.

The case relies on the so-called “Eddie Murphy Rule,” Rule 180.1, which was promulgated in 2011 in part because then-CFTC Chairman Gary Gensler felt that the wrongful acts by Eddie Murphy’s character in the hit movie “Trading Places” were not clear-cut violations of the CFTC rules at the time. It was expressly modeled on Rule 10b-5 under the Securities Exchange Act of 1934, the source of authority long relied on by the U.S. Securities and Exchange Commission in insider trading cases.

Crypto Insider Trading? Hegic’s WHITE Token Trades Might Attract SEC’s Attention, Experts Say

Hegic, a platform for trading crypto options on the Ethereum blockchain, could reap $17 million because of a highly profitable trading strategy executed by its pseudonymous developer, Molly Wintermute. She’s the sole developer for Hegic and its less popular platform, Whiteheart.

Late last month, Molly gave up on developing Whiteheart. In a message on the Discord server that Hegic and Whiteheart share, Molly said Whiteheart would return its $28 million treasury to investors and shut down.

The redemption news caused Whiteheart’s token to rally sixfold to $3,500 under heavy buying pressure from arbitrageurs eager for a piece of the treasury liquidation, a process Hegic is facilitating.

But no one is profiting more than Hegic. That protocol’s treasury, which is separate from Whiteheart’s, bought nearly a third of WHITE’s token supply three days before the shutdown announcement, according to blockchain data. Between that purchase and another in September, it can lay claim to almost half of Whiteheart’s treasury: $17 million of ether (ETH).

Companies Are Still Trying to Figure Out How to Comply With SEC Cyber Rules

Some public companies are still trying to figure out how to comply with new rules from the US Securities and Exchange Commission requiring speedy disclosure of significant cyberattacks.

Those rules, which kicked in Monday, require companies to report cyber incidents within four business days of determining they are “material” to shareholders. The SEC previously required firms to disclose major events that would be of shareholder interest, but didn’t specify cyber events.

Making that determination isn’t so easy, said Erez Liebermann, partner at Debevoise & Plimpton law firm.

In the past three months, Liebermann has advised more than 50 publicly listed companies on how to prepare for the new SEC rule, and participated in tabletop exercises with executives to help understand whether their new processes will stand up under the pressure of a major hack. Describing or quantifying what make makes an incident material to investors in the midst of responding to it is “super difficult,” Liebermann said.

Congress Passes Foreign Extortion Prevention Act, Targeting “Demand Side” of Foreign Bribery

On December 14, 2023, the U.S. Congress approved the Foreign Extortion Prevention Act (“FEPA”), which will make it a federal crime for any foreign government official to demand or receive a bribe from a U.S. citizen, resident or company in exchange for taking or omitting to take official action or conferring any improper business-related advantage. This legislation, which is part of the National Defense Authorization Act and expected to be signed into law by President Biden, substantially expands U.S. enforcement authority with respect to foreign bribery and aligns with the Biden Administration’s elevation of anti-corruption enforcement to a national security priority.

For decades, U.S. enforcement authorities have focused principally on the “supply side” of foreign bribery, charging companies and individuals with violating the Foreign Corrupt Practices Act (the “FCPA”) by offering, promising, authorizing or paying bribes to foreign government officials. FEPA’s enactment enables the Department of Justice to target more directly the “demand side,” the foreign officials who seek and accept bribes….

Nikola founder Trevor Milton sentenced to four years for fraud conviction

Trevor Milton, the convicted founder of electric- and hydrogen-powered truck maker Nikola, was sentenced to four years in prison on Monday after a jury last year found him guilty of lying to investors about the company’s technology.

Federal prosecutors in Manhattan said Milton misled investors by stating that Nikola had built a pickup from the “ground up,” that it had developed its own batteries even though he knew it was buying them, and that it had early success creating a “Nikola One” semi-truck that he knew did not work.

Hacker Selling Access to Binance’s Law Enforcement Request Panel for $10K

A bad actor is selling access to Binance’s law enforcement request panel, which provides lawful access to account data, for $10,000 in bitcoin (BTC) or monero (XMR).

Binance provides access via a third-party service called Kodex, commonly used by online financial institutions or social media platforms to validate law enforcement requests and facilitate access.

InfoStealers, a publication covering the Darknet and data breaches, reported that three computers belonging to law enforcement officers from Taiwan, Uganda, and the Philippines were compromised in a global malware campaign in 2023, leading to stolen browser-stored credentials and unauthorized access to Binance’s login panel.

Crypto Won’t Get Long-Awaited U.S. Rules in 2024, But the Courts May Steer Its Future

As they await new laws, industry leaders’ best guess is that they’ll get spot bitcoin exchange traded funds (ETFs) in early 2024. A tremendous amount of hope rides on that development from the U.S. Securities and Exchange Commission (SEC), which would establish highly liquid, regulated funds on exchanges. The sector is counting on that – a very frictionless way to get a stake in crypto – as a way to bring investors off the sidelines.

Even while the SEC may finally grant this boon, the agency and its cousin, the Commodity Futures Trading Commission (CFTC), are likely to continue their crypto enforcement agenda with high-profile cases. However, the biggest players, like Coinbase and Kraken, are already embroiled in the most relevant accusations, and those are now being worked out in court. That leaves the U.S. regulators in the same boat as the digital assets companies they’ve been targeting: Everybody is just waiting for the courts to decide who is more right. The longstanding dispute between the SEC and Ripple – which has largely gone against the agency – will probably reach an initial conclusion, at which point the SEC can appeal the earlier court ruling that it partially overreached in interpreting the so-called Howey test to label XRP a security. If the SEC appeals, the judiciary’s response to this fundamental legal fight could go on for many more months.

Crypto titans launch 2024 election play with $78M super PAC spend

A trio of super PACs backed by cryptocurrency executives and investors said Monday that they’ve raised $78 million as part of a major new push to influence the 2024 elections.

The campaign, which has support from venture capital giant Andreessen Horowitz, U.S. crypto exchange Coinbase and Cameron and Tyler Winklevoss, marks of a revival of the digital asset industry’s political operations, following the downfall of crypto megadonor Sam Bankman-Fried.

The goal of the effort is to back candidates who support crypto-friendly policy at a moment when the industry is facing intense scrutiny from federal regulators….