Netcapital charged by US SEC with fraud for allegedly inflating revenue

On August 10, the U.S. Securities and Exchange Commission filed a civil complaint in Boston federal court against Netcapital, accusing the fintech company of securities fraud. According to the SEC, Netcapital allegedly inflated its revenue by nearly $14 million through a scheme involving consulting agreements. These agreements, some of which were forged, were reportedly sham deals that generated no genuine revenue for the Boston-based company.

This fraudulent activity allowed Netcapital to more than quadruple its reported revenue during a period when it was raising millions of dollars from investors.

Netcapital did not immediately respond to requests for comment. The company had previously informed Nasdaq that it had until February 1, 2027, to regain compliance with requirements for its stock price or risk possible delisting. Notably, John Fanning, a co-founder of the music sharing service Napster and a member of Netcapital's advisory board, is listed among the defendants in the SEC's complaint.

His wife, Coreen Kraysler, serves as Netcapital's chief financial officer and is also named as a defendant. In March, the SEC had issued Wells notices to several Netcapital defendants, signaling its intention to bring civil charges against them and giving them an opportunity to respond.