SEC Charges TrustToken, TrueCoin in Stablecoin Fraud Case

SEC Charges TrustToken, TrueCoin Over TUSD and TrueFi Claims

TrueCoin and TrustToken recently settled charges filed by the U.S. Securities and Exchange Commission (SEC), which alleged that the companies were involved in the unregistered offering and sale of investment contracts between November 2020 and April 2023. TrustToken, the company behind the decentralized finance (DeFi) lending platform TrueFi, allowed users to engage with TrueUSD (TUSD), a stablecoin issued by TrueCoin.

SEC Allegations of Misleading Marketing

In a complaint filed on Sept. 24, the SEC accused both companies of using misleading marketing tactics to promote TUSD and TrueFi as “safe and trustworthy” investment options. Jorge G. Tenreiro, acting chief of the SEC’s Crypto Assets and Cyber Unit, stressed that this case highlights the importance of proper company registration to ensure investor protection.

Settlement and Industry Impact

Without admitting or denying the SEC’s charges, TrueCoin and TrustToken agreed to pay fines of $163,766. In addition, TrueCoin was required to pay an additional $340,930 in disgorgement. This settlement adds to the growing list of fines imposed by the SEC on crypto companies, which have paid over $7 billion to the agency since 2013.

The case further highlights the tension between crypto firms and the SEC, with many in the industry criticizing the regulator’s “regulation by enforcement” approach. As legal battles continue, companies like Coinbase are also challenging the SEC’s oversight of the crypto market, with lawmakers and even some SEC officials questioning the agency’s methods.

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