SEC filed expenses towards TrueCoin and TrustToken over fraud and providing of unregistered funding contracts.
TrueCoin issued the TrueUSD (TUSD) stablecoin, whereas TrustToken operated the TrueFi lending protocol.
The regulator alleges stablecoin TUSD had 99% of its reserves invested in an offshore fund as of September 2024.
The Securities and Trade Fee (SEC) has charged crypto firms TrueCoin and TrustToken for defrauding their traders in a stablecoin associated funding program.
In a press launch on Tuesday, September 24, 2024, the SEC mentioned it charged the 2 firms for fraud and the providing of unregistered funding contracts on the stablecoin TrueUSD (TUSD). Many exchanges had built-in TUSD.
99% of TUSD reserves invested in speculative fund
Per the SEC, the TUSD issuer TrueCoin and lending protocol TrueFi operator TrustToken engaged within the supply of unregistered funding contracts on TUSD between Nov. 2020 and April 2023. The crypto firms provided what the regulator says had been gross sales of TUSD packaged as “profit-making alternatives.”
These affords had been falsely marketed as secure, with the TUSD issuer claiming that the stablecoin was 100% backed by US {dollars}.
Nevertheless, as the fees filed on the US District Courtroom for the Northern District of California allege, a lot of the belongings backing the token had been put right into a speculative offshore funding fund. As a substitute, TrueCoin and TrustToken used these investments to earn returns for themselves.
“TrueCoin and TrustToken sought income for themselves by exposing traders to substantial, undisclosed dangers via misrepresentations in regards to the security of the funding,” Jorge G. Tenreiro, performing chief of the SEC’s crypto belongings & cyber unit, mentioned.
SEC claims that by September 2024, the defendants had 99% of the alleged TUSD reserves within the speculative fund.
Each TrueCoin and TrustToken have reportedly agreed settlement with the SEC. This contains civil penalties amounting to $163,766 every. TUSD issuer TrueCoin may also pay $340,930 in disgorgement and $31,538 as prejudgment curiosity.
