SEC Charges TrueUSD Backers $700K

TrueCoin and TrustToken, responsible for the TrueUSD stablecoin, have settled with the U.S. Securities and Exchange Commission (SEC) for $700,000.

According to the official release, the TrueUSD (TUSD) stablecoin’s affiliated supporters allegedly defrauded investors by misrepresenting the token’s stability.

TrustToken and TrueCoin were involved in the unregistered offer and sale of investment contracts in the form of the crypto asset TUSD, as stated in the complaint filed in the U.S. District Court for the Northern District of California.

Additionally, they were engaged in “profit-making opportunities” about TrueUSD from November 2020 to April 2023.

Acting Chief of the SEC’s crypto unit, Jorge G. Tenreiro, underscored the significance of registration in preventing investors from being deprived.

SEC Refers to TrueUSD as a “Purported Stablecoin”

TrueUSD was referred to as a “purported stablecoin” by the securities regulator due to its false advertising of the investment opportunity as secure and reliable.

Both TUSD supporters claimed in the complaint that the currency’s entire backing consisted of US dollars or its equivalents.

Nevertheless, a significant portion of the assets supporting TUSD were invested in speculative and risky offshore investment funds.

The complaint alleged that in March 2022, a speculative fund was invested with over half a billion dollars of the assets underpinning TrueUSD by an offshore entity and TrueCoin.

“TrueCoin and TrustToken were aware of redemption issues at the offshore fund; however, they continued to make false statements to investors, portraying TUSD as being backed one-to-one by U.S. dollars.”

Furthermore, by September 2024, the speculative fund had invested 99% of the reserves that supported the TUSD.

Neither TrueCoin nor TrustToken refuted nor admitted the SEC’s allegations. They have consented to pay civil penalties of $163,766 each to resolve the regulator’s allegations.

Furthermore, TrueCoin has agreed to pay a disgorgement of $340,930 and a prejudgment interest of $31,538.

The TrueUSD stablecoin has a market capitalization of $495 million and has managed to recover from a minor decline that occurred in the wake of the news. At the time of publication, the price of TUSD is $0.99.