SEC charges TrustToken and TrueCoin over stablecoin fraud

Two crypto companies associated with the TUSD stablecoin have been charged with securities violations by the U.S. Securities and Exchange Commission

TrueCoin and TrustToken have reached a settlement in a lawsuit filed by the SEC alleging unregistered offerings and sales of investment contracts between November 2020 and April 2023. TrustToken created TrueFi, a decentralized finance lending platform that allows users to use TrueUSD (TUSD), a stablecoin issued by TrueCoin.

The SEC said in a complaint dated Sept. 24 that both companies used misleading marketing tactics to promote TUSD and TrueFi as “trusted and reliable” investment vehicles. Jorge G. Tenreiro, interim head of the SEC’s Crypto Assets and Cyber ​​Unit, emphasized that the case highlights why corporate registration is critical for investor protection.

Cryptocurrency market participants, such as Dan Gallagher, former SEC staff member and current chief attorney for Robinhood Markets, often dispute this narrative adopted by SEC officials.

This conflict has led to ongoing legal battles involving companies like Coinbase. Lawmakers have also petitioned the securities agency over its “regulation by enforcement” approach, with SEC Commissioner Hester Peirce describing the regulator’s strategy as ineffective and confusing.

Without admitting or denying the allegations, TrueCoin and TrustToken agreed to pay a fine of $163,766. TrueCoin was also fined an additional $340,930 in restitution.

The settlement adds to a growing list of SEC fines levied against the crypto industry. Since 2013, crypto businesses have paid the agency more than $7 billion, and one study found that crypto fines have increased by more than 3,000% in the past 12 months.