The US Securities and Exchange Commission settled charges Tuesday with two US entities behind the stablecoin TrueUSD.

The regulator alleged that TrueCoin LLC and TrustToken Inc., both of which are based in California, had engaged in “fraudulent and unregistered sales” of TrueUSD, according to the press release.

Both entities told investors that their so-called stablecoin was backed one-to-one with US dollars, alleged the SEC.

However, by September 2024, more than 99% of the assets backing TrueUSD were invested in a speculative, offshore fund, said the complaint.

The total value of the stablecoin is currently around $485 million, according to DefiLlama.

“TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment,” Jorge G. Tenreiro, acting chief of the SEC’s Crypto Assets & Cyber Unit, said in a statement.

A support email address for developers behind TrueUSD did not immediately return a request for comment.

The enforcement action is the SEC’s latest as it approaches the end of the fiscal year. Historically, litigation releases from the agency accelerated in September, according to a previous analysis from DL News.

Other recent crypto actions this month include an SEC settlement with trading app eToro, charges against crypto trading firms NanoBit and CoinW6, and a settlement with crypto hedge fund Galois Capital.

A stablecoin’s rocky road

The recent trajectory of stablecoin TrueUSD has been rocky.

Although TrueCoin sold TrueUSD’s operations to an offshore company in December 2020, it was still “heavily involved” up until July 2023, read the SEC’s complaint.

That month, the ex-CEO of the stablecoin developer sued former colleagues and alleged that they muscled him out of the business.

At the time of his ousting in 2020, he had been in talks with billionaire Justin Sun over the sale of TrueUSD. “The lawsuit has nothing to do with me,” Sun later told DL News.

In September 2023, Binance ended zero-fee trading between Bitcoin and TrueUSD.

And while the stablecoin’s total value reached a height of $3.8 billion, per DefiLlama, it briefly lost its peg with the dollar in the beginning of 2024.

Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email him at bweiss@dlnews.com.