The U.S. Securities and Exchange Commission (SEC) has charged two cryptocurrency firms, TrustToken and TrueCoin, with securities law violations linked to their involvement with the TUSD stablecoin. The allegations assert that both companies engaged in unregistered offerings and sales of investment contracts from November 2020 through April 2023.
TrustToken, known for its decentralized finance platform TrueFi, developed TrueUSD, a stablecoin issued by TrueCoin. In a complaint filed on September 24, the SEC claimed that the companies employed deceptive marketing strategies to present TUSD and TrueFi as “safe and trustworthy” investment options. Jorge G. Tenreiro, the acting chief of the SEC’s Crypto Assets and Cyber Unit, underscored the importance of proper company registration for safeguarding investors.
The legal landscape around cryptocurrency has been contentious, with critics, including former SEC staff members like Dan Gallagher of Robinhood Markets, frequently questioning the SEC’s enforcement-focused approach. Ongoing litigation involving firms such as Coinbase further complicates this dynamic. Additionally, lawmakers have expressed concerns about the SEC’s regulatory tactics, with Commissioner Hester Peirce labeling the agency’s strategy as both inefficient and perplexing.
As part of the settlement, both TrueCoin and TrustToken have agreed to pay fines totaling $163,766. TrueCoin faces an additional financial penalty of $340,930 in disgorgement. This resolution adds to the growing tally of fines imposed by the SEC on the cryptocurrency sector, which has exceeded $7 billion since 2013. Notably, a recent study revealed that penalties in the crypto industry have skyrocketed by more than 3,000% over the past year.
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