Originally published on: August 10, 2024
Ideanomics, an electric vehicle company, has reached a settlement with the United States Securities and Exchange Commission (SEC) regarding fraud charges related to financial reporting and alleged misrepresentation of the company’s performance.
An investigation by the SEC uncovered that between 2017 and 2019, Ideanomics and its senior executives made significant material misrepresentations about the company’s financial status. The charges specifically focused on misleading investors about the company’s revenue from crypto assets.
The SEC’s allegations stated that Ideanomics falsely reported revenues exceeding $40 million in 2019 based on fraudulent accounting practices related to a crypto asset transaction. This misleading information led to overstated financial statements, deceiving shareholders and the public about the true financial health of the company.
The settlement with Ideanomics coincides with ongoing legal proceedings involving Nvidia, a separate company facing accusations of providing false information regarding its cryptocurrency mining revenue in 2017 and 2018, mirroring the allegations against Ideanomics.
Individuals implicated in the Ideanomics investigation include former chairman and CEO Zheng Wu, current CEO Alfred Poor, and former chief financial officer Federico Tovar. The SEC’s findings revealed their involvement in various fraudulent activities, such as issuing false revenue guidance, providing fraudulent documents to the company’s auditor, and concealing personal interests in business transactions.
As part of the settlement, all parties agreed to resolve the charges without admitting or denying the SEC’s findings. Wu agreed to pay over $3.3 million in disgorgement and penalties, along with a 10-year ban from holding directorial or managerial positions in public companies. Tovar and Poor consented to cease-and-desist orders and monetary penalties, with Tovar facing a temporary prohibition from practicing as an accountant.
Ideanomics agreed to pay a $1.4 million penalty and will enlist an independent compliance consultant to review and bolster its internal accounting controls as part of the settlement terms.
In a related case in 2022, Nvidia settled with US authorities for $5.5 million over allegations of inadequate disclosure concerning the impact of crypto mining on its gaming business.
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