Trusttoken Inc. and Truecoin LLC, two crypto companies, have been charged by the U.S. Securities and Exchange Commission (SEC) for fraudulent misrepresentations and unregistered sales of investment contracts related to their stablecoin called trueusd (TUSD).
The SEC’s complaint, released on Tuesday, alleges that Truecoin and Trusttoken falsely marketed TUSD as a stablecoin fully backed by U.S. dollars, despite a significant portion of the assets being invested in a speculative offshore fund. The companies reportedly engaged in unregistered sales of investment contracts tied to TUSD and the Truefi lending platform from November 2020 to April 2023.
Although they were aware of redemption problems with the offshore fund by Fall 2022, Truecoin and Trusttoken continued to make false statements about the backing of TUSD. The SEC claims that by September 2024, 99% of the reserves were invested in the risky fund, exposing investors to undisclosed risks.
Truecoin and Trusttoken have agreed to settle the charges without admitting or denying them. They will pay penalties and disgorgement, with final judgments pending court approval. The SEC’s Crypto Assets and Cyber Unit’s Acting Chief, Jorge G. Tenreiro, emphasized the importance of registration in providing investors with crucial information. The SEC’s investigation into the matter is still ongoing.
In January 2024, TUSD lost its peg and dropped to $0.979 per coin. By the end of March, the supply of the stablecoin had dramatically decreased from 1.1 billion to 612 million TUSD. Currently, its market cap is $495 million, accounting for only 0.0215% of the total crypto market value of $2.3 trillion. Over the past 24 hours, TUSD’s global trade volume reached $19,390,191, representing roughly 0.02074% of the $93.52 billion traded on Tuesday.
What are your thoughts on the SEC’s charges against Trusttoken and Truecoin? Feel free to share your opinions in the comments section below.
