The U.S. Securities and Exchange Commission (SEC) has moved to freeze over $27 million in trading proceeds from alleged illegal distributions and sales of restricted shares of Longfin Corp.

Longfin Corp. went public on Nasdaq on December 13, 2017 and soon after announced the acquisition of Ziddu.com, a blockchain technology empowered solutions provider. In its complaint, the SEC said that shortly after these announcements, the stock price of Longfin rose dramatically and its market capitalization exceeded $3 billion.

According to the complaint, Longfin founding CEO Venkata Meenavalli caused the company to issue more than two million unregistered, restricted shares to Amro Izzelden “Andy” Altahawi, who was the corporate secretary and a director of Longfin, and tens of thousands of restricted shares to Dorababu Penumarthi and Suresh Tammineedi, who were allegedly acting as nominees for Meenavalli. The SEC alleges that Altahawi, Penumarthi, and Tammineedi illegally sold large blocks of their restricted Longfin shares to the public while the stock price was highly elevated, reaping more than $27 million in profits collectively.

The SEC said that the subsequent sales of those restricted shares violated federal securities laws and has received court order freezing more than $27 million in trading proceeds. The complaint seeks injunctive relief, disgorgement of ill-gotten gains, and penalties, among other relief.

“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” said Robert Cohen, Chief of the SEC Enforcement Division’s Cyber Unit. “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.”

Rosen Law Firm announced last week that it has filed a class action lawsuit on behalf of purchasers of the securities of Longfin Corp. between December 13, 2017 and April 2, 2018 and seeks to recover damages for Longfin investors under the federal securities laws.