New York, Friday, September 27, 2024 –The US Securities and Exchange Commission (SEC) has reached a settlement with TrueCoin LLC and TrustToken Inc. for charges involving the sale of TrueUSD (TUSD) stablecoin, according to multiple reports.
Both companies agreed to pay $163,766 in penalties without admitting or denying the allegations, while TrueCoin will also pay $340,930 in disgorgement.
From November 2020 to April 2023, TrueCoin and TrustToken offered unregistered investment contracts linked to TrueUSD through the TrueFi lending protocol, according to the SEC. The companies falsely marketed the stablecoin as fully backed by U.S. dollars or equivalent assets. However, a large portion of TUSD reserves was invested in a speculative offshore fund, exposing investors to significant risks.
SEC said that TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks. The SEC emphasized the importance of registration to protect investors from misinformation and undisclosed risks.
By late 2022, both companies were aware of redemption process issues but continued to mislead investors about TUSD’s backing. By September 2024, 99% of the reserves backing TUSD had been invested in the speculative fund, per the SEC’s findings.
SEC Chair also reiterated concerns about the risks posed by stablecoins, likening them to money market funds and emphasizing the need for compliance with securities laws.
