The United States Securities and Exchange Commission (SEC) has settled fraud charges with electric vehicle company Ideanomics over financial reporting and “misleading the public about the company’s performance.”
According to the SEC website, its investigation revealed that between 2017 and 2019, Ideanomics and several of its senior executives engaged in significant material misrepresentations about the company’s financial performance. The charges specifically involved misleading investors about the company’s revenue from crypto assets.
Misleading financial performance
The SEC alleged that Ideanomics reported revenues of over $40 million for 2019 based on fraudulent accounting related to a crypto asset transaction. The agency claimed that the false reporting led to overestimated financial statements, misleading shareholders and the public about the company’s financial health.
The settlement with Ideanomics comes as the US Supreme Court is considering an appeal in a separate securities fraud lawsuit against Nvidia, which is accused of providing false information regarding its cryptocurrency mining revenue in 2017 and 2018, similar to the accusations faced by Ideanomics.
Key figures involved
The Ideanomics investigation implicated its former chairman and CEO, Zheng Wu, the current CEO, Alfred Poor, and former chief financial officer, Federico Tovar. The SEC found that these individuals were involved in multiple fraudulent activities.
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The activities included issuing false revenue guidance in 2017, providing the company’s auditor with a fraudulent letter of intent, and concealing Wu’s personal interest in companies conducting business with Ideanomics.
Settlement and penalties
According to the report, all parties involved have agreed to settle the charges without admitting or denying the SEC’s findings. Wu consented to pay over $3.3 million in disgorgement, prejudgment interest and a $200,000 penalty. Additionally, Wu agreed to a 10-year ban from holding any directorship or managerial position in a public company.
Tovar and Poor each consented to cease-and-desist orders and will pay $75,000 in penalties. Tovar will also be barred from practicing as an accountant for at least two years.
Ideanomics has agreed to pay a $1.4 million penalty and will engage an independent compliance consultant to review and enhance its internal accounting controls.
In 2022, Nvidia agreed to pay US authorities $5.5 million to settle charges that did not adequately disclose the impact of crypto mining on its gaming business.
A US federal judge dismissed a lawsuit against Nvidia in March 2021, rejecting claims that the company had deliberately concealed a substantial portion of its revenue from cryptocurrency mining sales in 2017 and 2018.
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