SEC Cracks Down on TrueUSD Creators Over Fraudulent Investments
TrueCoin and TrustToken, the companies responsible for the TrueUSD (TUSD) stablecoin, have reached a settlement with the Securities and Exchange Commission (SEC) following allegations of misconduct.
The SEC revealed that these firms improperly placed the vast majority of their reserves into a speculative offshore fund, which prompted charges of fraud and the unregistered sale of investment contracts.
According to the SEC’s complaint filed in California, TrueCoin and TrustToken marketed TUSD through their TrueFi lending protocol from November 2020 to April 2023, misrepresenting these offerings as secure investments backed by US dollars. In reality, they diverted these funds into high-risk ventures, jeopardizing investors’ capital.
By March 2022, over $500 million of TUSD’s backing had been funneled into the risky fund, and despite recognizing redemption challenges in late 2022, the companies continued to mislead investors about the stability of TUSD. By September 2024, an alarming 99% of TUSD’s reserves were linked to this speculative investment.
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Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets & Cyber Unit, criticized the companies for prioritizing their profits at the expense of investors. He stressed the importance of registration, as it ensures investors receive essential information for informed decision-making.
In response to the SEC’s findings, TrueCoin and TrustToken agreed to settle without admitting wrongdoing. They will pay civil penalties of $163,766 each, and TrueCoin must also return $340,930 plus interest, pending court approval. This settlement occurs amid a record $4.68 billion in fines the SEC has imposed on the crypto sector in 2024, leading to scrutiny of the agency’s regulatory approach during a recent congressional hearing.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
