The U.S. Securities and Exchange Commission (SEC) has revealed that nearly all of the reserves backing the TrueUSD (TUSD) stablecoin were invested in a risky offshore fund, leading to charges against the stablecoin's creators, TrueCoin LLC and TrustToken Inc. The companies have settled these charges without admitting or denying the allegations.
Misleading Investors About Stability
The SEC's investigation found that from November 2020 to April 2023, TrueCoin and TrustToken falsely marketed TUSD as being fully backed by U.S. dollars. In reality, over $500 million of the reserves were invested in speculative assets. By September 2024, a shocking 99% of TUSD’s reserves were tied to high-risk investments, exposing investors to significant dangers.
SEC Acting Chief Jorge Tenreiro stated that the companies prioritized profit over investor protection, falsely claiming that TUSD was a stable, dollar-backed asset. Both companies have agreed to pay penalties, including $340,930 in disgorgement and civil fines of $163,766 each.
Part of the SEC’s Broader Crypto Crackdown
This case forms part of the SEC’s wider effort to regulate the crypto industry, which has seen record fines in 2024, totaling $4.68 billion. The SEC's enforcement actions have drawn criticism from lawmakers, with some accusing the agency of overreach in its regulation of digital assets.
Source: CoinPaprika
