- The SEC filed prices towards TrueCoin and TrustToken for fraud and providing unregistered funding contracts.
- TrueCoin issued the TrueUSD (TUSD) stablecoin, whereas TrustToken operated the TrueFi lending protocol.
- The regulator claims that the TUSD stablecoin had 99% of its reserves invested in an offshore fund as of September 2024.
The Securities and Alternate Fee (SEC) has accused crypto firms TrueCoin and TrustToken of defrauding their buyers in an funding scheme associated to stablecoins.
In a press launch on Tuesday, September 24, 2024, the SEC stated it charged each firms with fraud and providing unregistered funding contracts for the TrueUSD (TUSD) stablecoin. Many exchanges had TUSD built-in.
99% of TUSD reserves invested in a hedge fund
In response to the SEC, TUSD issuer TrueCoin and lending protocol supplier TrueFi TrustToken engaged in providing unregistered TUSD funding contracts between November 2020 and April 2023. The crypto firms supplied what the regulator stated have been TUSD gross sales packaged as “earnings.” alternatives.”
These choices have been falsely marketed as protected, with the TUSD issuer claiming that the stablecoin was 100% backed by US {dollars}.
Nevertheless, in line with the fees filed within the US District Court docket for the Northern District of California, many of the belongings backing the token have been put right into a speculative offshore funding fund. As an alternative, TrueCoin and TrustToken used these investments to generate income for themselves.
“TrueCoin and TrustToken sought earnings for themselves by exposing buyers to substantial, undisclosed dangers by misrepresentations in regards to the safety of the funding,” stated Jorge G. Tenreiro, Appearing Chief of the SEC's Division of Crypto and Cyber Property.
The SEC alleges that by September 2024, the defendants had 99% of the alleged TUSD reserves within the hedge fund.
Each TrueCoin and TrustToken have reportedly agreed to settle with the SEC. That features civil penalties of $163,766 apiece. The issuer of TUSD TrueCoin may also pay $340,930 in disgorgement and $31,538 in prejudgment curiosity.
