- TrustToken and TrueCoin settle with the SEC over charges of defrauding TrueUSD (TUSD) investors.
- The SEC alleged the companies misled investors about TUSD’s backing and invested reserves in a high-risk fund.
- TUSD de-pegged from the US dollar in early 2024, following Binance’s removal of the stablecoin from its Launchpools.
The Securities and Exchange Commission (SEC) has settled charges it had leveled against Trust Token and TrueCoin, the California-based companies accused of defrauding users with the TrueUSD (TUSD) stablecoin.
Both companies have agreed to pay $163,766 each in fines, with TrueCoin also paying a disgorgement of $340,000 and $31,538 in interest.
TrustToken and TrueCoin Sued by SEC
The SEC charged TrustToken and TrueCoin for allegedly misleading investors by claiming that TUSD was pegged to US dollars or equivalents, when in fact, a major portion of the assets were actually invested in a high-risk offshore fund.
Read also: Crypto Community Reacts as TrueUSD (TUSD) Faces Stability Issues
By March 2022, more than $500 million had been invested in speculative funds. Despite the long crypto winter and the redemption issues in 2022, the companies continued to misrepresent TUSD’s backing.
Also, the agency revealed that a significant portion of TUSD’s reserves were tied up in high-risk funds as of September 2024. According to the regulator, the companies mismanaged investor funds for their own personal profit. The SEC’s complaint against the companies alleged that they “offered and sold TUSD together with profit-making opportunities.”
Jorge G. Tenreiro, acting chief of the SEC’s Crypto Assets & Cyber Unit, highlighted the significance of regulatory compliance. He said that TrueCoin and TrustToken misguided investors for personal profits, stating, “Investors in these products continue to be deprived of the key information needed to make fully informed decisions.”
Read also: SEC Faces Backlash Over Alleged Misconduct in Ripple Case
At the beginning of 2024, TUSD was depegged, raising concerns on the stability of the token. This happened after Binance’s decision to remove TUSD from two Launchpools. The stablecoin reportedly fell to a low of around $0.97 on January 18.
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