Quick take:
- In a filing with the U.S. District Court for the Northern District of California, the SEC alleged that TrueCoin was an issuer of TUSD.
- The regulator also said TrustToken developed and operated TrueFi, ‘a lending protocol’.
- Both companies agreed to settle with the SEC without admitting or denying the allegations.
The US Securities and Exchange Commission (SEC) has charged TrueCoin and TrustToken for allegedly defrauding investors via investment contracts involving TrueUSD (TUSD), “an alleged stablecoin”. According to the press release, the SEC told the U.S. District Court for the Northern District of California that TrustToken developed and operated TrueFi, ‘a lending protocol’, while TrueCoin was an issuer of TUSD.
The period during which the fraudulent activity is said to have taken place spanned two years and five months, from November 2020 to April 2023, the press release said.
During that time, “TrueCoin and TrustToken engaged in the unregistered offer and sale of investment contracts in the form of the crypto asset TUSD and profit-making opportunities with respect to TrueUSD on TrueFi,” the SEC alleges.
The filing also alleges that the two companies falsely marketed the investment opportunity as safe and trustworthy by claiming that TUSD was fully backed by U.S. dollars or their equivalent.
TUSD was reportedly sold to an offshore entity in March 2022, by which time TrueCoin had invested more than half a billion US dollars of the assets purportedly backing TUSD in a speculative fund, which TrueCoin and TrustToken became aware of its redemption problems by fall that year, but continued to market the product as being backed 1-for-1 by US dollars.
The SEC added that by September 2024, 99% of the reserves backing TUSD were invested in the speculative fund.
Commenting on the filing, Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets & Cyber Unit said in a statement: “TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment.”
Both companies agreed to settle with the SEC without admitting or denying the allegations. Each company will pay civil penalties of $163,766, with TrueCoin also agreeing to pay a disgorgement of $340,930 with prejudgment interest of $31,538.
In May of this year, TUSD was part of a Binance delisting activity that saw the leading crypto exchange company remove multiple tokens from its platform, as part of a compliance requirement following its own battle with the SEC. At the time the TUSD token lost nearly 80% of its market capitalisation.
Following Tuesday’s announcement, the token dipped slightly to 0.9986 before bouncing back to 0.9991.
Stay on top of things:
Subscribe to our newsletter using this link – we won’t spam!
Follow us on X and Telegram.
Credit: Source link
