SEC charges and settles with TrueCoin, TrustToken over fraudulent TrueUSD claims

The US Securities and Change Fee (SEC) has accused TrueCoin and TrustToken of fraudulent and unregistered gross sales of funding contracts associated to the TrueUSD (TUSD) stablecoin, and mendacity about its backing, based on a September 24 assertion.

TrueCoin and TrustToken agreed to settle the SEC’s fees with out admitting or denying guilt. In addition they agreed to injunctions and civil penalties of $163,766. TrueCoin can pay a further $340,930 in payout plus $31,538 in curiosity, pending courtroom approval.

SEC criticism

The SEC’s criticism alleged that TrueCoin and TrustToken allegedly marketed TUSD as totally backed by US {dollars} or equivalents, whereas a good portion was invested in a dangerous offshore fund.

As of March 2022, greater than half a billion {dollars} in TUSD-backed property had been invested within the speculative fund. Regardless of realizing reimbursement points within the fall of 2022, firms continued to misrepresent TUSD as one-for-one dollar-backed.

The regulator acknowledged that 99% of TUSD reserves have been within the speculative fund as of September 2024. It added that each entities mismanaged buyers’ funds by in search of earnings for themselves, exposing customers to “substantial, undisclosed dangers from misrepresentations in regards to the security of the funding.”

Moreover, the SEC highlighted that between November 2020 and April 2023, the businesses engaged in unregistered provides and gross sales of TUSD funding contracts and revenue alternatives on TrueFi, a decentralized cash market the place customers can lend stablecoins as strains of credit score to firms to earn curiosity. .

TrueUSD at the moment has a market cap of virtually $494 million and is experiencing a slight de-peg because of the information.

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