SEC v. CanaFarma Hemp Products Corp.; Vitaly Fargesen; Igor Palatnik; Frank Barone; and Kirill Chumenko, No. LR-25906, Southern District of New York (Dec. 5, 2023) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25906 / December 5, 2023 Securities and Exchange Commission v. CanaFarma Hemp Products Corp., et al., No. 1:21-cv-8211 (S.D.N.Y. filed Oct. 5, 2021, amended complaint filed Nov. 28, 2023) SEC Obtains Judgments Against Former Hemp Company Executives for Fraudulent Offerings On December 1, 2023, the United States District Court for the Southern District of New York entered consent judgments against Frank Barone and Kirill Chumenko, both former Senior Vice Presidents of Sales & Marketing at CanaFarma Hemp Products Corp. (“CanaFarma”), in connection with an approximately $15 million offering fraud. The SEC previously charged CanaFarma, a Canadian start-up hemp company with offices in Vancouver and New York, and its two co-founders, Vitaly Fargesen and Igor Palatnik, in connection with the same scheme. The SEC’s amended complaint, filed on November 28, 2023, alleges that, in 2019 and 2020, Barone and Chumenko, along with CanaFarma, Fargesen, and Palatnik, raised millions of dollars from investors. While raising these funds, Fargesen and Palatnik made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its own farm when in fact it had not processed any of this hemp and its products used hemp supplied by third parties. The amended complaint alleges that Barone and Chumenko, at the direction of Fargesen, made unsupported changes to CanaFarma’s financial model in order to disguise an expected series of payments to Fargesen and Palatnik. Additionally, the amended complaint alleges that, Fargesen and Palatnik—in some instances with the assistance of Barone and Chumenko—misappropriated at least $4 million and used the funds either for their personal use or for purposes unrelated to CanaFarma. In addition to the previously announced charges against CanaFarma, Fargesen, and Palatnik, the amended complaint, filed in the United States District Court for the Southern District of New York, charges Barone and Chumenko with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5(a) and (c) thereunder. The judgments against Barone and Chumenko permanently enjoin them from violating Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. The judgments also bar each of Barone and Chumenko from serving as an officer or director of a public company and from participating in penny stock offerings, and order each to pay disgorgement, prejudgment interest, and civil penalties. The length of the bars and the amounts of the monetary remedies will be determined by the Court upon motion of the SEC at a later date. The SEC’s investigation was conducted by John Lehmann and Lee A. Greenwood, and was supervised by Thomas P. Smith, Jr. The litigation is being handled by Mr. Lehmann, Lindsay Moilanen, and Russell Feldman. The SEC appreciates the assistance of the United States Attorney’s Office for the Southern District of New York and the FBI. SEC Complaint

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 25906 / December 5, 2023 Securities and Exchange Commission v. CanaFarma Hemp Products Corp., et al., No. 1:21-cv-8211 (S.D.N.Y. filed Oct. 5, 2021, amended complaint filed Nov. 28, 2023) SEC Obtains Judgments Against Former Hemp Company Executives for Fraudulent Offerings On December 1, 2023, the United States District Court for the Southern District of New York entered consent judgments against Frank Barone and Kirill Chumenko, both former Senior Vice Presidents of Sales & Marketing at CanaFarma Hemp Products Corp. (“CanaFarma”), in connection with an approximately $15 million offering fraud. The SEC previously charged CanaFarma, a Canadian start-up hemp company with offices in Vancouver and New York, and its two co-founders, Vitaly Fargesen and Igor Palatnik, in connection with the same scheme. The SEC’s amended complaint, filed on November 28, 2023, alleges that, in 2019 and 2020, Barone and Chumenko, along with CanaFarma, Fargesen, and Palatnik, raised millions of dollars from investors. While raising these funds, Fargesen and Palatnik made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its own farm when in fact it had not processed any of this hemp and its products used hemp supplied by third parties. The amended complaint alleges that Barone and Chumenko, at the direction of Fargesen, made unsupported changes to CanaFarma’s financial model in order to disguise an expected series of payments to Fargesen and Palatnik. Additionally, the amended complaint alleges that, Fargesen and Palatnik—in some instances with the assistance of Barone and Chumenko—misappropriated at least $4 million and used the funds either for their personal use or for purposes unrelated to CanaFarma. In addition to the previously announced charges against CanaFarma, Fargesen, and Palatnik, the amended complaint, filed in the United States District Court for the Southern District of New York, charges Barone and Chumenko with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5(a) and (c) thereunder. The judgments against Barone and Chumenko permanently enjoin them from violating Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. The judgments also bar each of Barone and Chumenko from serving as an officer or director of a public company and from participating in penny stock offerings, and order each to pay disgorgement, prejudgment interest, and civil penalties. The length of the bars and the amounts of the monetary remedies will be determined by the Court upon motion of the SEC at a later date. The SEC’s investigation was conducted by John Lehmann and Lee A. Greenwood, and was supervised by Thomas P. Smith, Jr. The litigation is being handled by Mr. Lehmann, Lindsay Moilanen, and Russell Feldman. The SEC appreciates the assistance of the United States Attorney’s Office for the Southern District of New York and the FBI. SEC Complaint