Photo credit: Joshua Roberts/Bloomberg

A US regulator has once again taken action against two crypto companies for unregistered sales of TUSD.

The Securities and Exchange Commission (SEC) announced that it has charged the crypto companies TrustToken and TrueCoin with defrauding investors in a stablecoin investment program.

According to the SEC’s complaint filed with the US District Court for the Nothern District of California, TrueCoin, the issuer of TrueUSD stablecoin, and TrustToken, the developer and operator of TrueFi, conducted “fraudulent and unregistered sales of investment contracts involving TUSD.”

SEC’s complaint alleges that unregistered sales and offers of TUSD happened from Nov. 2020 until April 2023. Additionally, the US regulator accused TrueCoin and TrustToken of falsely claiming the investment opportunity is “safe and trustworthy.

An investigation by the SEC found the crypto company used a “substantial portion” of assets backing TUSD was invested in a “speculative and risky offshore investment fund” to earn more profits. 

Responding to the SEC's complaint, TruCoin and TrustToken have agreed to settle the charges by paying civil penalties of $163,766 each along with enjoining them from violating the federal securities laws. 

TrueCoin has also agreed to pay disgorgement of $340,930 with prejudgment interest of $31,538.

Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets & Cyber Unit, claimed, “TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment.”

“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.”