SEC charges TrueCoin LLC and TrustToken Inc. with fraud

The U.S. Securities and Exchange Commission accused TrueCoin LLC and TrustToken Inc. of fraud and selling unregistered securities in the form of TUSD.

Regulator's allegations

In the lawsuit filed in the U.S. District Court for the Northern District of California, it is stated that TrueCoin issued TUSD, while TrustToken was responsible for developing and managing the TrueFi lending protocol.

According to the SEC, from November 2020 to April 2023, the companies offered investors unregistered investment contracts through TUSD, promising profits on the TrueFi platform. At the same time, TrueCoin and TrustToken misled investors by claiming that their investments were safe and secure.

Insufficient backing of TrueUSD

It was revealed that a significant portion of the reserves meant to back the stablecoin was invested in an offshore investment fund. This allowed the companies to earn additional profits while concealing this information from investors.

As of March 2022, TrustToken and TrueCoin had invested over half a billion dollars from TUSD reserves into a speculative fund.

Fines and obligations

Although TrueCoin and TrustToken neither admitted to nor contested the allegations, they agreed to pay fines of $163,766 each.

Additionally, TrueCoin committed to returning improperly obtained funds amounting to $340,930, along with $31,538 in interest.

Both companies also undertook obligations to comply with federal securities regulations.