The United States regulator has taken legal action against investment firm Touzi Capital over allegedly misleading investors about the liquidity and profitability of its crypto asset mining fund.
Touzi Capital allegedly defrauded over 1,200 US investors through crypto asset mining fund security offerings that raised “almost $95 million,” according to a statement published by the US Securities and Exchange Commission (SEC) on Nov. 29.
False promises made to crypto mining fund investors
The investment was allegedly pitched to investors as funding crypto mining operations. However, the SEC claims this wasn’t true.
Instead, Touzi Capital reportedly "commingled investor funds" across its subsidiary businesses, funneling money into ventures that had "nothing" to do with crypto mining.
The SEC also accused Touzi Capital of misleading investors about the risks involved and the profitability of its crypto mining asset fund.
“The SEC alleges that the defendants made materially false and/or misleading statements as to the stability of these investments – comparing them to high-yield money market accounts.”
The SEC stated the fund was "risky and illiquid" and continued accepting new investors even after its investments started “failing.”
Most SEC crypto cases may be ‘dismissed’ in the future
It comes after a US federal judge declined an appeal to dismiss a SEC lawsuit against a promoter of an allegedly fraudulent crypto mining firm that carried out an $18 million scheme.
Kristoffer Krohn unsuccessfully argued in his appeal that the SEC had not established that the Green Boxes were securities offerings or investment contracts in its complaint.
However, the ongoing legal battles between crypto firms and the SEC will likely fade away with Donald Trump reelected as the 47th president of the United States, according to Consensys CEO Joe Lubin.
“Maybe not all the cases, maybe not all elements of the case, but I have a feeling that our industry is going to save hundreds of millions of dollars going forward,” he told Cointelegraph at DevCon 2024 in Thailand.
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