According to Cointelegraph, Curve Finance is considering removing TrueUSD (TUSD) from the list of collateral for Curve Stablecoin (crvUSD) as U.S. regulators accuse TrueCoin, the issuer of TUSD, of violating securities laws.

On September 25, the cross-chain messaging protocol Wormhole proposed on Curve’s governance forum to reduce the TUSD support cap of crvUSD to zero in order to completely eliminate TUSD’s regulatory risks and solvency issues.

Currently, the ‘PegKeeper’ liquidity pool allows users to mint up to $10 million of crvUSD using TUSD.

The proposal also suggests reducing the crvUSD minting of Paypal’s stablecoin PYUSD from $15 million to $5 million to ensure that the dependencies of each PegKeeper are appropriate for the respective pools.

On September 24, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against TrueCoin and TrustToken, accusing them of fraud and unregistered sales of investment contracts.

The SEC’s complaint alleges that TrueCoin and TrustToken falsely promoted TUSD as a safe and trustworthy investment opportunity, when in fact the majority of assets were invested in a speculative and high-risk offshore investment fund.

TrueCoin and TrustToken did not admit or deny the charges but agreed to pay a civil penalty of $163,766 each and to be enjoined from further violations of the federal securities laws.

Curve’s crvUSD stablecoin can be minted with a variety of cryptocurrency collateral, including Ethereum (ETH) and Wrapped Bitcoin (WBTC).

WBTC is the most valuable part of crvUSD collateral, with a total locked value of over $68 million. Wrapped Staked Ether (wstETH) is the second largest collateral, with a total locked value of about $60 million.

The Sept. 25 proposal argues that crvUSD is overly reliant on smaller stablecoins, particularly TUSD, which has a questionable track record and was recently accused by the SEC of defrauding investors.