US SEC and crypto firms TrueToken and TrueCoin have arrived at an agreement to settle charges.
The two companies faced charges from the regulator regarding the issuance of stablecoin TUSD.
In the last 24 hours, the crypto regulatory sphere has sprung into action. While a convict in the FTX collapse, Caroline Ellison received her court statement, Sam Bankman-Fried’s case was further extended. On the other hand, Congressman Tom Emmer bashed Gary Gensler in a recent court meeting on his approach to crypto regulations.
Meanwhile, the SEC has made a settlement announcement with TrustToken and TrueCoin in the recent TUSD fraud investigation. According to the SEC, the two crypto companies will pay settlement fees of $163,766 each. TrueCoin will pay an additional $340,930 disgorgement fee with prejudgement interest of $31,538.
Notably, the two cryptocurrency firms faced charges of providing fraudulent information to investors of TUSD coin. The SEC said, that TrueToken and TrueCoin had not appropriately backed the stablecoin and that the reserves were inaccurate. Additionally, the SEC also stated that TrueToken and TrueCoin offered and sold unregistered investment contracts from November 2020 to April 2023.
The regulator also alleged that the companies falsely marketed the investment opportunity as safe and trustworthy. However, it stated that a portion of the TUSD reserves were invested in a risky and obscure offshore investment fund as a way of earning additional returns for the assets.
How did TrueToken and TrueCoin Respond to the SEC Charges?
The issuer of the TUSD stablecoin, TrueCoin, and its lending protocol TrueToken have not commented on the issue. SEC stated that the two firms have neither denied nor admitted to the allegations and agreed to pay the settlement charges. The acting chief of SEC’s Crypto Assets & Cyber Unit, Jorge G. Tenreiro said that the case was a prime example of why registrations were necessary.
Jorge G. Tenreiro, in the SEC announcement, stated:
“TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment”
Furthermore, the SEC is still battling lawsuits against leading cryptocurrency firms Coinbase and Ripple. While Ripple’s lawsuit awaits an appeal decision, Coinbase has filed for a rulemaking petition.
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