The SEC has settled the allegations and ordered a combined penalty of $700,000.
The lawsuit was filed at the U.S. District Court for the Northern District of California.
Improper stablecoin investment programs and unregistered selling of securities were among the allegations levied against TrueCoin and TrustToken by the US Securities and Exchange Commission (SEC).
As stated in the agency’s news release, the SEC has settled the allegations against the businesses and ordered them to pay a combined penalty of $700,000. The lawsuit was filed at the U.S. District Court for the Northern District of California.
High-risk Offshore Investment
Furthermore, TrueCoin issued the stablecoin TrueUSD (TUSD) based on the TrueFi lending protocol, which was developed by TrustToken. The firms introduced TUSD in 2018. But between November 2020 and April 2023, the SEC claimed that they offered and sold investment contracts. And profit-making possibilities using the stablecoin without registering.
The government organization claimed that TrustToken and TrueCoin misrepresented TUSD as an asset completely backed by USD. While in fact a large amount of the token’s funding had been used for speculation. The TrueFi protocol’s administrators gambled on a high-risk offshore investment fund. With the USD that was supposed to support TUSD in an effort to increase their profits.
The TrueFi team had already invested over $500 million of the stablecoin’s intended funding by the time they sold TUSD operations to an offshore firm in March 2022. Later that year, TrustToken and TrueCoin found out that the offshore fund had redemption issues. However, they persisted in spreading misleading information to TUSD investors about the stablecoin’s USD backing.
Moreover, by September 2024, according to the SEC, TrustToken and TrueCoin had put 99% of the funds supporting TUSD into the hazardous fund. Also, as part of their settlement with the SEC, the cryptocurrency businesses have committed to paying disgorgement, prejudgment interest, civil fines, and penalties.
Highlighted Crypto News Today:
Taiwan Allows Professional Investors to Access Foreign Virtual Asset ETFs
