SEC Takes Aim at TrueCoin and TrustToken Over TrueUSD Fraud Claims

The U.S. Securities and Exchange Commission (SEC) has filed charges against TrueCoin and TrustToken for engaging in fraudulent and unregistered sales of investment contracts tied to the TrueUSD (TUSD) stablecoin.

The companies are accused of misleading the public regarding TUSD’s backing, as detailed in a statement on September 24.

While neither company admitted to the allegations, both agreed to a settlement with the SEC, which includes civil penalties of $163,766 each. Additionally, TrueCoin will pay $340,930 in disgorgement and $31,538 in interest, pending court approval.

The SEC’s complaint alleges that TrueCoin and TrustToken falsely promoted TUSD as fully backed by U.S. dollars, when a significant amount was actually invested in a high-risk offshore fund.

By March 2022, over $500 million of TUSD’s assets were involved in this speculative investment. Despite acknowledging redemption issues by fall 2022, the companies continued to misrepresent TUSD’s backing as one-to-one with the U.S. dollar. As of September 2024, the SEC indicated that 99% of TUSD’s reserves were still tied up in this speculative fund.

Furthermore, the SEC accused the companies of mismanaging investor funds for personal benefit and exposing consumers to significant, undisclosed risks through deceptive claims about investment safety.

The complaint also stated that from November 2020 to April 2023, TrueCoin and TrustToken sold unregistered TUSD investment contracts and profit opportunities associated with TrueFi, a decentralized lending platform.