SEC Charges TrustToken, TrueCoin in Stablecoin Fraud

The U.S. Securities and Exchange Commission has charged two crypto companies associated with the TUSD stablecoin with securities violations

The SEC filed charges against TrueCoin and TrustToken, alleging that they engaged in unregistered offering and investment contract sales between November 2020 and April 2023.

These charges were subsequently resolved. TrustToken established the decentralized finance lending platform TrueFi, which enables users to employ TrueUSD, a stablecoin that TrueCoin issued.

The SEC asserted in a complaint filed on September 24 that both companies employed deceptive marketing strategies to advertise TUSD and TrueFi as “safe and trustworthy” investment vehicles.

The case underscored the importance of company registration in safeguarding investors, as emphasized by Jorge G. Tenreiro, the acting chief of the SEC’s Crypto Assets and Cyber Unit.

Crypto market participants, including former SEC staff members such as Dan Gallagher, Robinhood Markets’s chief attorney, have frequently contested this rhetoric extolled by SEC officials.

Companies such as Coinbase have been embroiled in ongoing legal disputes due to this conflict.

Lawmakers have petitioned the securities agency concerning its “regulation by enforcement” approach, and SEC commissioner Hester Peirce has characterized the regulator’s strategy as inefficient and perplexing.

TrueCoin and TrustToken consented to pay $163,766 in fines without admitting or denying the allegations. TrueCoin was also subjected to an additional disgorgement of $340,930.

The settlement is the latest addition to the SEC’s growing list of penalties imposed on the cryptocurrency industry.

The agency has received over $7 billion in payments from crypto enterprises since 2013, and a recent study revealed that crypto fines have increased by over 3,000% in the past year.