On 7 November, the US Securities and Exchange Commission (SEC) charged Srinivas Koneru, founder of trade finance fintech Triterras Fintech Pte Ltd (“Triterras”), with fraud and misrepresentation. The SEC is an independent federal agency that regulates the US securities market and enforces laws against market manipulation. 

Triterras was a NASDAQ-listed company operating the trade finance platform Kratos, which allowed companies to obtain financing and conduct trades on blockchain. Kratos was hailed by many as a solution for the $1.5 trillion funding shortfall faced by companies in the commodities and export industries.

Triterras claimed that it had onboarded funds amounting to $1.1 billion by August 2020. However, the reality was quite different. The majority of the trades were related-party transactions between companies owned or controlled by Koneru and his associates. The SEC notes in the complaint that only around 10% of the volume on Kratos was linked to genuine financing. 

The SEC alleges that Koneru made numerous false statements to investors, both about the real volume of the trades and the independence of the clients of Kratos.

Triterras stopped trading in March 2022, after investors deserted it following multiple reports that the trades on the blockchain were not genuine. The good thing about blockchain is that the data is transparent, so anyone could take a look and understand which companies were trading on Kratos. More than 90% of the trades on Kratos back then were between related party companies surrounding Srinivas Koneru’s other business, Rhodium Resources.

Rhodium Resources has always been a question mark for multiple trade finance banks. The company was trading in palm oil and other soft commodities, had a healthy balance sheet, and multiple trading partners. However, a closer look at its counterparties shows that 99% of them are essentially linked companies, sharing either shareholders, directors, addresses, employees, or infrastructure.  For years, Rhodium has operated in this manner, recycling funds with very little real output.

When the bank caught up and stopped funding, Srinivas Koneru decided to embark on a public listing of the newly established Triterras following the Special Purpose Acquisition Company (SPAC) craze of 2020, when it merged with the listed company Netfin Acquisition Corp. Netfin was set up by Richard Maurer, a longtime associate of Koneru. 

They then decided to surf the latest trend of trade finance – blockchain – hoping that by offering a blockchain solution, they would obtain further financing from investors chasing the latest trend. That obviously did not work.

However, there is one aspect of the whole Triterras-Rhodium debacle that has not yet surfaced: its links with the Sujana Group of Companies and Sujana (YS) Chowdry. 

YS Chowdry is a former member of the Indian parliament and owner of the Sujana Group of Companies. Since the spring of 2019, Sujana and YS Chowdry himself have been at the centre of a USD 600 million bank fraud, according to the Enforcement Director and the Central Bureau of Investigation (CBI).

Rhodium used to offer financing to and trade with entities of the Sujana Group. It later acquired a set of insolvent companies of the Sujana Group in 2020 and even co-owned companies with the Sujana Group. But the genesis of Rhodium is intimately linked to the Sujana Group: Rhodium had initially received bank guarantees from Sujana when it started to operate out of Singapore.

What remains to be seen is if, given the close involvement, the SEC will also look at the ties between Triterras, Srinivas Koneru, and their initial Indian backer, YS Chowdry.