The US Securities and Exchanges Commission (SEC) and electric vehicle company Ideanomics have settled a lawsuit brought by the agency against the latter. Ideanomics was accused of misrepresenting accounting statements to misrepresent its financial health. The company’s executives manipulated financial data related to the revenue it generated from crypto assets.

In an X post, the financial regulator mentioned, “Today we announced settled fraud charges against Ideanomics Inc., formerly Seven Stars Cloud Group Inc., and its former Chairman & CEO, Zheng (Bruno) Wu, for misleading the public about the company’s financial performance.” According to a statement issued by the SEC about the lawsuit, Ideanomics indulged in this behavior between 2017 and 2019 under Wu’s leadership. Its current CEO, Alfred Poor, and former CFO, Federico Tovar, were also defendants in the suit and have settled.

Among numerous wrongdoings, “The SEC further alleged that Ideanomics, Wu, Poor, and Tovar improperly accounted for a deal involving crypto assets in 2019, resulting in the company’s overstatement of revenues by more than $40 million, and made false representations in company financial statements.”

All defendants agreed to the SEC’s terms without accepting or denying its charges. Wu has agreed to pay over $3.3 million in disgorgement and prejudgement interest. He must shell out an additional $200,000 in penalties. Poor and Tovar will pay $75,000 each. Additionally, Wu has been barred from participating in directorial or managerial roles for public companies for ten years. Tovar faces a two-year ban from working as an accountant.

Ideanomics will pay $1.4 million to the SEC and hire a third-party consultant to review the accounting framework and controls it has in place and implement the required improvements. Stacy Bogart, Associate Director of the SEC’s Division of Enforcement, said, “The investing public must be able to trust the accuracy of a company’s disclosures, and we will hold accountable executives who abuse that trust by engaging in fraud.”

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