The Securities and Exchange Commission (SEC) has settled charges against Trust Token and TrueCoin, both based in California. The companies faced allegations of defrauding users through their TrueUSD (TUSD) stablecoin. Each company will pay $163,766 in fines as part of the settlement, with TrueCoin also responsible for a disgorgement of $340,000 and $31,538 in interest.
TrustToken and TrueCoin failed in their social obligations as novices to their investors by misrepresenting specific facts. They accused TUSD of being linked to US dollars or equivalent. However, a significant investment component was tied to a risky offshore vehicle. Such speculative funds had attracted bets of more than half a billion dollars by the end of March 2022. Even though it took a long time for the market to remain in the ‘bull’ phase and members encountered problems with redemptions, the companies kept manipulating TUSD’s support.
The SEC further revealed that a considerable part of TUSD’s reserves remained in high-risk funds as of September 2024. The regulator stated that the companies embezzled investors’ funds to enrich themselves. The SEC complained that Trust Token and TrueCoin ‘sold TUSD along with get-rich schemes.
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SEC Reaffirms on the Issue of Disclosure
Jorge G. Tenreiro, the acting chief of the SEC’s Crypto Assets & Cyber Unit, emphasized the importance of compliance. He stated that TrueCoin and TrustToken defrauded investors for their financial benefits. Tenreiro said that consumers of such products cannot access specific information that is important for decision-making. From the formation of the SEC, its goal is to oversee that firms conduct their business transparently and within the law and regulation.
This settlement proves that the flow of regulatory measures remains high in cryptocurrencies. This is because as the industry gets more saturated with regulation, firms have to be more careful to avoid the pitfalls of rules. This case also shows that such manipulations present severe penalties for those companies engaging in them. This emphasizes the standards of the decentralized process of the fast-growing crypto market.
The SEC’s actions against Trust Token and TrueCoin reflect broader efforts to protect investors. As the cryptocurrency market grows, regulatory bodies remain focused on preventing fraud. These developments indicate a commitment to maintaining integrity within the financial ecosystem.
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