Longfin Soars 2000% After Buying Blockchain Company; CEO Says Not Justified

(RTTNews) - Longfin shares soared more than 2000 percent after the financial technology company announced its acquisition of Ziddu.com, a cryptocurrency company with no revenue, amid the ongoing hype around bitcoin and blockchain.

Longfin's CEO Venkat Meenavalli, while talking on CNBC's "Fast Money," said that around $3.8 billion market cap is not justified.

Following his comments, Longfin shares spiraled downwards. It fell 6 percent on Tuesday's regular trading.

At its December 13 IPO on Nasdaq, the New York-based Longfin was worth $220 million at around $5 a share.

It was last Friday that Longfin agreed to buy Ziddu, a blockchain technology company, from a private Singapore firm Meridian Enterprises in exchange for 2.5 million shares of the company.

Meanwhile, the filing for the deal revealed that Meridian Enterprises Pte.Ltd, is a company in which 95% of the equity is owned by Venkat S. Meenavalli. 

In two days after the deal announcement, Longfin surged more than 1000 percent, indicating the mania surrounding digital currencies these days.

"We are a profitable company. ... We have nothing to do with this euphoric mania," Meenavalli said to CNBC. Longfin is said to be growing at a 200 percent rate and made $28 million in the past six months.

Meenavalli noted that Ziddu, which is using the same blockchain technology of bitcoin, is in a testing phase, but is expected to make $3 million next year.

Blockchain technology creates rapid, permanent transaction records and eliminates the need for a third-party intermediary. The cryptocurrency's demand is surging these days. The price of Bitcoin has skyrocketed by more than 1,600 percent this year alone to above $19,000.