The US Securities and Alternate Fee (SEC) has charged TrueCoin and TrustToken with fraudulent and unregistered gross sales of funding contracts involving the TrueUSD (TUSD) stablecoin, and mendacity about its backing, in response to a Sept. 24 assertion.
TrueCoin and TrustToken agreed to settle the SEC’s prices with out admitting or denying fault. Additionally they consented to injunctions and $163,766 civil penalties every. TrueCoin pays a further $340,930 in disgorgement plus $31,538 in curiosity, pending courtroom approval.
SEC criticism
The SEC’s criticism alleged that TrueCoin and TrustToken reportedly marketed TUSD as absolutely backed by US {dollars} or equivalents whereas a considerable portion was invested in a dangerous offshore fund.
By March 2022, over half a billion {dollars} of TUSD-backing property had been invested within the speculative fund. Regardless of consciousness of redemption points by the Fall of 2022, the businesses continued to misrepresent TUSD as one-to-one dollar-backed.
The regulator acknowledged that 99% of TUSD reserves had been within the speculative fund as of September 2024. It added that each entities mismanaged buyers’ funds by trying to find earnings for themselves, which uncovered customers to “substantial, undisclosed dangers by means of misrepresentations in regards to the security of the funding.”
Moreover, the SEC highlighted that from November 2020 to April 2023, the businesses engaged in unregistered provides and gross sales of TUSD funding contracts and profit-making alternatives on TrueFi, a decentralized cash market the place customers can lend stablecoins as credit score strains to firms to earn curiosity.
TrueUSD at present has a market cap of almost $494 million and is experiencing a slight de-peg following the information.
