SEC Reaches Settlement with TrueCoin Over Unregistered Sale of TrueUSD Stablecoin

• The U.S. Securities and Exchange Commission (SEC) has finalized a settlement with TrueCoin LLC and TrustToken Inc. regarding their stablecoin, TrueUSD.
• The settlement follows allegations related to the unregistered sale of TrueUSD and profit-making schemes associated with the TrueFi lending protocol.
• Both companies have agreed to pay penalties, with TrueCoin also facing additional disgorgement costs.

The SEC reaches a significant settlement with TrueCoin and TrustToken over TrueUSD, addressing the misrepresented safety and registration issues.

SEC Settlement with TrueCoin and TrustToken

The SEC has announced that it has reached a settlement with TrueCoin LLC, the issuer of TrueUSD (TUSD), and TrustToken Inc., the developer behind the TrueFi lending protocol. The charges against the companies involved the unregistered offer and sale of TUSD, marketed under false pretenses of safety and backing.

Unregistered Offer and Sale of TUSD

From November 2020 to April 2023, the SEC disclosed that TrueCoin and TrustToken sold investment contracts through TUSD without proper registration. This sale was accompanied by promises of secure investment opportunities, which were not accurately portrayed to investors. Contrary to their claims, a significant portion of the assets was invested in high-risk offshore funds, seeking to generate higher returns, exposing investors to significant risks.

Penalties and Disgorgement

As part of the settlement, TrueCoin and TrustToken did not admit to or deny the allegations but have each agreed to pay $163,766 in penalties. Additionally, TrueCoin has committed to paying $340,930 in disgorgement. This settlement reflects the SEC’s stringent stance on the necessity of proper registration to ensure transparency and investor protection.

The Importance of Registration

Jorge G. Tenreiro, the acting chief of the SEC’s Crypto Assets & Cyber Unit, emphasized the significance of this case as a demonstration of why registration is crucial. Tenreiro noted that investors were deprived of essential information required for making informed investment decisions due to the misrepresentations made by TrueCoin and TrustToken. This settlement underscores the SEC’s ongoing efforts to hold crypto-asset issuers accountable and protect investors from undisclosed risks.

Conclusion

The SEC’s settlement with TrueCoin and TrustToken serves as a reminder of the importance of regulatory compliance in the crypto industry. As the market continues to evolve, such enforcement actions highlight the necessity for transparency and accuracy in how investment opportunities are presented. Investors should remain vigilant and well-informed, ensuring that all investment contracts they engage in are fully compliant with regulatory standards.