Content delivery network provider Cloudflare Inc. today revised its price range on its initial public offering scheduled for Friday as the company also revealed that it may have broken U.S. sanctions laws by providing services to banned entities and governments.

Cloudflare revised the price guidance for its IPO to $12 to $14 per share, up from its previous guidance of $10 to $12 per share.

At the high end, the direct part of the IPO, in which it’s offering 35 million shares, will see Cloudflare raise $490 million. The underwriters have an option to purchase an additional 5.25 million shares on top of that, bringing the total potential raised to $553 million.

The increasing price would be reflective of strong demand for shares in the IPO, but in a last-minute twist Cloudflare also revealed that it may have violated U.S. economic and trade sanctions regulations.

The Wall Street Journal reported today that the company disclosed potential economic and trade sanctions violations to the Treasury Department in May but has now only amended its U.S. Securities and Exchange Commission S-1 filing to reflect that disclosure.

Cloudflare said it had determined that its products were used by, or for the benefit of, certain individuals and entities that have been blacklisted and that some of those entities made payments to the company. Those entities include terrorists and narcotics traffickers or are affiliated with governments currently subject to U.S. sanctions.

In addition, the company disclosed that it may have violated U.S. export control regulations when selling hardware. “In 2019, we learned that we may have failed to comply with certain U.S. export-related filing and reporting requirements and may have submitted incorrect information to the U.S. government in connection with certain hardware exports,” Cloudflare said in its filing.

That Cloudflare has only disclosed this days before its IPO certainly raises some concerns, but it’s not clear how severe the breaches are. It’s one thing to provide services that breach sanctions accidentally but an entirely different matter if Cloudflare knew what it was doing and continued to do so.

It should be noted that Cloudflare’s CDN service is highly popular, so it simply may have been a handful of cases among millions of transactions that slipped through Cloudflare’s checks.

Cloudflare is scheduled to go public Friday at the opening of Nasdaq trading.

Image: Cloudflare