TrustToken, TrueCoin Settle With SEC Over Fraud Accusations in Stablecoin Investing

TrustToken
and
TrueCoin
–

now
rebranded
and
under
the
umbrella
of
Archbock
–

settled
accusations
that
they
knowingly
misrepresented
the
backing
of
the
TrueUSD

(TUSD)
stablecoin
and
offered
securities
tied
to
it
without
properly
registering,
the
U.S.
Securities
and
Exchange
Commission
said
in
a
Tuesday
statement.

The
California-based
firms,
which
didn’t
admit
or
deny
wrongdoing
in
settling
with
the
SEC,
had
claimed
TUSD
enjoyed
one-to-one
dollar
reserves
when
the
stablecoin’s
issuer
was
instead
investing
in
“a
speculative
and
risky
offshore
commodity
fund,”
the
agency
said.

The
companies
agreed
to
pay
$163,766
each
in
fines,
and
TrueCoin
will
return
nearly
$400,000
in
profits
and
interest,
assuming
a
federal
court
approves
the
settlement.
They’ve
also
agreed
not
to
violate
the
relevant
securities
law,
the
SEC
said.

TrueCoin
was
the
original
issuer
of
TUSD,
which
later
ended
up

in
the
hands
of
offshore
firm
Techteryx
and
has
a
current
market
cap
of
nearly
half
a
billion
dollars.
TrustToken
operated
a
“so-called
lending
protocol,”
TrueFi,
the
SEC
said.
The
entities
in
Tuesday’s
settlement
are
accused
of
engaging
in
unregistered
offers
and
sales
of
securities
involving
TUSD
through
TrueFi,
and
the
agency
said
they
remained
closely
tied
to
the
asset
after
unloading
the
stablecoin
to
the
other
issuer.

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

At
one
point,
more
than
13%
of
TUSD
were
tied
to
profit-seeking
opportunities
on
the
TrueFi
platform,
according
to
the
complaint.

TUSD

slipped
from
its
$1
dollar
peg
earlier
this
year.