Netcapital (NASDAQ:NCL), an early entrant in the securities crowdfunding sector, has been charged with fraud. According to a report by Reuters, the Securities and Exchange Commission has filed charges in Boston Federal Court alleging that NetCapital improperly recorded $14 million in revenue from consulting by John Fanning, an advisory board member of the company who is also described as the creator of the Netcapital brand.
Netcapital has recently shared that it is at risk of delisting due to minimum price requirements. The company stated yesterday that Nasdaq Listing Qualifications Staff had given it an additional 180 days to get its price above the $1 minimum under Nasdaq rules. On February 4th, NetCapital received a notice from Nasdaq indicating its price per share had been under $1 for 30 consecutive business days. Netcapital said it has provided written notice of its intention to cure the bid-price deficiency during the additional compliance period, including through a reverse stock split if necessary. As of this reporting, shares of Netcapital are trading around $0.35 a share with a market cap of $2.765 million.
The report regarding the claims of fraud states that the consulting agreements apparently drove revenue to more than 4x higher while the company sought new money from investors. Fanning allegedly controlled shell companies that orchestrated “sham consulting deals” worth between $1 million and $2 million. The fraud was allegedly centered on Netcapital Funding Portal and Netcapital Advisors.
To quote the court filing:
“After Netcapital Advisors supposedly rendered consulting services, the Portfolio Companies commenced Reg CF securities offerings on the Funding Portal. Numerous documents executed in connection with certain Portfolio Companies’ Reg. CF securities offerings, including documents filed with the Commission and available to potential investors, were also forged.”
The filing goes on to claim that during the relevant period, Netcapital’s revenue was mostly derived from fraudulent portfolio consulting agreements.
Fanning allegedly exercised control over the portfolio companies and owned significant amounts of their equity. Rather than owning these companies in his own name, Fanning owned them
through intermediary companies that he also controlled.
Coreen Kraysler, Netcapital’s CFO, is also named as a defendant in the case. Kraslyer is also the wife of Fanning.
Netcapital received a Wells notice from the SEC in March. The notice indicates the SEC is pursuing an investigation.
Fanning was previously a founder and CEO of Napster. The Netcapital advisory board includes prominent names, including a former CEO of PayPal, a co-founder of DraftKings, and a former CEO of Sprint.
Netcapital was originally launched as Funding Portal to support securities offerings under Reg CF. Over time, it has provided additional services to capital market participants.
At the beginning of 2026, Netcapital announced it was shifting its strategy to capitalize on tokenization and listing its first tokenized offering. This past spring, Netcapital revealed that it plans to evolve from a transaction-based capital formation marketplace into a comprehensive, data-driven capital markets infrastructure platform.