SEC Charges Crypto Companies TrustToken and TrueCoin With Defrauding Investors Regarding Stablecoin Investment Program
summary
TrueCoin LLC and TrustToken Inc. settled SEC charges for the unregistered and fraudulent sale of TUSD stablecoin investment contracts by misrepresenting its dollar-backed reserves.
paragraph
The SEC charged TrueCoin LLC and TrustToken Inc. for the unregistered sale of investment contracts involving the TUSD stablecoin and the TrueFi lending protocol. The defendants allegedly diverted over $500 million of TUSD reserves into a speculative offshore fund while falsely claiming the assets were fully backed by U.S. dollars. To settle the matter, both entities will pay $163,766 in civil penalties, with TrueCoin also paying $340,930 in disgorgement and $31,538 in interest.
narrative
The SEC filed charges against TrueCoin LLC and TrustToken Inc. for the unregistered sale of investment contracts related to the TUSD stablecoin and the TrueFi lending protocol. Although marketed as being fully backed by U.S. dollars, the defendants secretly invested over $500 million of these reserves into a risky offshore investment fund. By September 2024, 99% of the TUSD reserves were tied up in this speculative fund, despite the companies being aware of redemption problems as early as Fall 2022. To resolve the charges, both companies agreed to pay $163,766 in civil penalties each. Additionally, TrueCoin must pay $340,930 in disgorgement plus $31,538 in prejudgment interest. The settlements, which are subject to court approval, include injunctions against future violations of federal securities laws.
Classified crypto-securities(confidence 100%). EDGAR detection: forms 1-A/S-1/8-K· recall 43% / precision 2%. detection rule →
Parties
bryan hsuehjames connorJorge G. Tenreiromichael brennanmichael c. bakermichael friedmanmore than half a billion dollars in speculative fundpasha salimisec investigationSecurities and Exchange Commissionsettled charges against truecoin llc and trusttoken inc.truecoin llctrusttoken inc.
Keywords
truecointrusttokentruecoin trusttokentusdsecinvestmentbacking tusdinvestorscryptocrypto companiescompanies trusttokentrusttoken truecointruecoin defraudingdefrauding investorsinvestors regarding
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 3
- $341K $340,930 $100K–$1M
- $164K $163,766 $100K–$1M
- $32K $31,538 $10K–$100K
Entities 13
- person bryan hsueh
- person james connor
- person Jorge G. Tenreiro
- person michael brennan
- person michael c. baker
- person michael friedman
- company more than half a billion dollars in speculative fund
- person pasha salimi
- agency sec investigation
- agency Securities and Exchange Commission
- company settled charges against truecoin llc and trusttoken inc.
- company truecoin llc
- company trusttoken inc.
Triples 21
- Securities And Exchange Commission announced settled charges against TrueCoin LLC and TrustToken Inc.
- TrueCoin LLC issued TUSD
- TrustToken Inc. developed TrueFi
- TrustToken Inc. operated TrueFi
- TrueCoin LLC engaged in unregistered offer and sale of investment contracts
- TrustToken Inc. engaged in unregistered offer and sale of investment contracts
- TrueCoin LLC marketed investment opportunity as safe and trustworthy
- TrustToken Inc. marketed investment opportunity as safe and trustworthy
- TrueCoin LLC invested more than half a billion dollars in speculative fund
- TrustToken Inc. made false statements to investors
- TrueCoin LLC agreed to pay civil penalties of $163,766
- TrustToken Inc. agreed to pay civil penalties of $163,766
- TrueCoin LLC agreed to pay disgorgement of $340,930
- TrueCoin LLC agreed to pay prejudgment interest of $31,538
- Michael C. Baker conducted SEC investigation
- Michael Friedman conducted SEC investigation
- Pasha Salimi conducted SEC investigation
- Bryan Hsueh conducted SEC investigation
- Michael Brennan supervised the matter
- James Connor supervised the matter
- Jorge G. Tenreiro supervised the matter
PDF (from attached: complaint)
Text layers
Extracted body text (2,735c)
The Securities and Exchange Commission today announced settled charges against TrueCoin LLC and TrustToken Inc. for their fraudulent and unregistered sales of investment contracts involving TrueUSD (TUSD), a purported stablecoin. According to the SEC’s complaint, filed in U.S. District Court for the Northern District of California, TrueCoin was an issuer of TUSD and TrustToken was the developer and operator of TrueFi, a so-called lending protocol. The SEC’s complaint alleges that from November 2020 until April 2023, TrueCoin and TrustToken engaged in the unregistered offer and sale of investment contracts in the form of the crypto asset TUSD and profit-making opportunities with respect to TrueUSD on TrueFi. The complaint further alleges that TrueCoin and TrustToken falsely marketed the investment opportunity as safe and trustworthy by claiming that TUSD was fully backed by U.S. dollars or their equivalent, when in fact a substantial portion of the assets purportedly backing TUSD had been invested in a speculative and risky offshore investment fund to earn additional returns for the defendants. The complaint alleges that, by approximately March 2022, after the TUSD operations had been sold to an offshore entity, that entity and TrueCoin had invested more than half a billion dollars of the assets purportedly backing TUSD in the speculative fund, and that, by Fall 2022, TrueCoin and TrustToken became aware of redemption problems at the offshore fund but continued to make false statements to investors casting TUSD as backed one-for-one by U.S. dollars. As alleged, by September 2024, 99% of the reserves backing TUSD were invested in the speculative fund. “TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment,” said Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets & Cyber Unit. “This case is a prime example of why registration matters, as investors in these products continue to be deprived of the key information needed to make fully informed decisions.” Without admitting or denying the allegations, TrueCoin and TrustToken have agreed to settle the SEC’s charges by consenting to the entry of final judgments enjoining them from violating applicable provisions of the federal securities laws and to pay civil penalties of $163,766 each. TrueCoin has agreed to pay disgorgement of $340,930 with prejudgment interest of $31,538. The settlements are subject to court approval. The SEC’s investigation, which is ongoing, was conducted by Michael C. Baker, Michael Friedman, Pasha Salimi, and Bryan Hsueh. The matter was supervised by Michael Brennan, James Connor, and Mr. Tenreiro.
OCR text (2,735c · html-text · 99% conf)
The Securities and Exchange Commission today announced settled charges against TrueCoin LLC and TrustToken Inc. for their fraudulent and unregistered sales of investment contracts involving TrueUSD (TUSD), a purported stablecoin. According to the SEC’s complaint, filed in U.S. District Court for the Northern District of California, TrueCoin was an issuer of TUSD and TrustToken was the developer and operator of TrueFi, a so-called lending protocol. The SEC’s complaint alleges that from November 2020 until April 2023, TrueCoin and TrustToken engaged in the unregistered offer and sale of investment contracts in the form of the crypto asset TUSD and profit-making opportunities with respect to TrueUSD on TrueFi. The complaint further alleges that TrueCoin and TrustToken falsely marketed the investment opportunity as safe and trustworthy by claiming that TUSD was fully backed by U.S. dollars or their equivalent, when in fact a substantial portion of the assets purportedly backing TUSD had been invested in a speculative and risky offshore investment fund to earn additional returns for the defendants. The complaint alleges that, by approximately March 2022, after the TUSD operations had been sold to an offshore entity, that entity and TrueCoin had invested more than half a billion dollars of the assets purportedly backing TUSD in the speculative fund, and that, by Fall 2022, TrueCoin and TrustToken became aware of redemption problems at the offshore fund but continued to make false statements to investors casting TUSD as backed one-for-one by U.S. dollars. As alleged, by September 2024, 99% of the reserves backing TUSD were invested in the speculative fund. “TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment,” said Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets & Cyber Unit. “This case is a prime example of why registration matters, as investors in these products continue to be deprived of the key information needed to make fully informed decisions.” Without admitting or denying the allegations, TrueCoin and TrustToken have agreed to settle the SEC’s charges by consenting to the entry of final judgments enjoining them from violating applicable provisions of the federal securities laws and to pay civil penalties of $163,766 each. TrueCoin has agreed to pay disgorgement of $340,930 with prejudgment interest of $31,538. The settlements are subject to court approval. The SEC’s investigation, which is ongoing, was conducted by Michael C. Baker, Michael Friedman, Pasha Salimi, and Bryan Hsueh. The matter was supervised by Michael Brennan, James Connor, and Mr. Tenreiro.