The U.S. Securities and Exchange Commission (SEC) found that nearly all of TrueUSD's reserves were invested in high-risk offshore funds, leading to charges against TrueCoin and TrustToken.
the US Securities and Exchange Commission (SEC) has found that TrueCoin LLC and TrustToken Inc, creators of the stablecoin #TrueUSD (TUSD), invested nearly all of their reserves in high-risk offshore funds. The revelations prompted allegations of fraud and unregistered sales of investment contracts, but both companies settled without admitting or denying the allegations.
the SEC's opinion, TrueCoin and TrustToken misled investors about the safety of their funds by pretending that #TUSD was fully backed by U. S. dollars From November 2020 through April 2023, the companies sold TUSD through TrueFi's lending platform and and advertised it as a safe investment backed by U. S. dollars. In reality, these reserves were invested in speculative investments, exposing investors to significant risk.
By March 2022, more than $500 million that was supposed to back TUSD was diverted into this risky fund Despite redemption difficulties by fall 2022, TrueCoin and TrustToken continued to defraud investors By September 2024, 99% were tied to this speculative fund, and Jorge G. Tenreiro, acting chief of the SEC's Crypto Asset and Cyber Division, said that both companies tried to profit by putting investors' money at risk under the guise of investment stability.
After the SEC reached its conclusion, both companies agreed to a settlement. Both companies will be penalized and banned from violating securities laws in the future; TrueCoin will pay $340,930 in damages and $31,538 in interest pending court approval. The companies have also agreed to pay civil penalties of $ 163,766 each.
Read us at: Compass Investments
