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

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

Crypto companies TrustToken and TrueCoin settle with US SEC

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

Furthermore, the SEC alleged that the companies engaged in false marketing by claiming that TUSD was fully backed by US dollars or their equivalent when the funds backing the stablecoin had been invested in a risky overseas investment fund.

The SEC stated that ”By fall 2022, TrueCoin and TrustToken became aware of redemption problems at the offshore fund but continued to make false statements to investors, casting TUSD as backed one-for-one by US dollars.” and added, “By September 2024, 99% of the reserves backing TUSD were invested in the speculative fund.” 

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

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 settled charges against TrueCoin LLC and TrustToken Inc. for their fraudulent and unregistered sales of investment contracts involving TrueUSD (TUSD) stablecoin.

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