TrueCoin and TrustToken have reached a settlement with the US SEC regarding fraudulent charges

• The US SEC announced settlement charges against TrueCoin LLC and TrustToken Inc. on Tuesday.
• TrustToken and TrueCoin falsely claimed that their stablecoin (TUSD) was fully backed by US dollars while investing in risky offshore funds.
• Pending court approval, each faces civil penalties of $163,766.

The Securities and Exchange Commission (SEC) announced on Tuesday that it has settled charges against TrueCoin LLC and TrustToken Inc. for their fraudulent and unregistered sales of investment contracts involving TrueUSD (TUSD) stablecoins. Pending court approval, each company faces civil penalties of $163,766.

Cryptocurrency companies TrustToken and TrueCoin settle with US SEC

According to the SEC, TrueCoin issued TUSD stablecoins and TrustToken developed and operated TrueFi (a lending protocol). The complaint alleges that from November 2020 to April 2023, TrueCoin and TrustToken engaged in the sale of investment contracts in the form of the cryptoasset TUSD and opportunities to profit in respect of TrueUSD on TrueFi without proper registration.

In addition, the SEC alleged that the companies engaged in false marketing by claiming that TUSD was backed entirely by US dollars or their equivalent when the funds backing the stablecoin were invested in a risky overseas investment fund .

The SEC stated that “By the fall of 2022, TrueCoin and TrustToken became aware of redemption issues at the offshore fund, but continued to make false statements to investors, casting TUSD as backed one-to-one against the US dollar.” and added: “By September 2024, 99% of the reserves backing the TUSD have been invested in the hedge fund.”

Jorge G. Tenreiro, Acting Head of the SEC’s Crypto Assets & Cyber ​​Unit, said: “TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through false representations about investment safety.”

Jorge concluded: “This case is a prime example of why registration matters, as investors in these products continue to be deprived of the key information needed to make fully informed decisions.”

On Tuesday, the SEC announced that it had settled charges against TrueCoin LLC and TrustToken Inc. for their fraudulent and unregistered sales of investment contracts involving TrueUSD (TUSD) stablecoins.

“TrueCoin and TrustToken have agreed to settle SEC charges, consent to the entry of final judgments enjoining them from violating applicable provisions of the federal securities laws, and pay civil penalties of $163,766 each. TrueCoin agreed to pay a charge of $340,930 with prejudgment interest of $31,538. The settlements are subject to court approval.” the SEC said in a press release.