TUSD Stablecoin Fraud Case, TrueCoin and TrustToken Agree to Pay Fines
2024-09-25
Bittime - The US SEC announced that it has reached an agreement with TrueCoin LLC and TrustToken Inc. regarding stablecoin sales TrueUSD (TUSD).
This case attracted attention because it involved alleged stablecoin fraud. What really happened? Read this article to find out!
TUSD Stablecoin Fraud Case
From November 2020 to April 2023, TrueCoin (TUSD stablecoin) and TrustToken (developer of the TrueFi lending protocol) allegedly offered and sold investment contracts without being officially registered.
Apart from that, these two companies also offer opportunities for investors to gain profits through TrueUSD on the TrueFi platform. They claim that the investment is fully backed by US dollars or equivalent assets.
However, according to the SEC, most of the funds that were supposed to back the stablecoin were invested in high-risk investment funds overseas.
This is very different from what was conveyed to investors. The SEC also accused these two companies of providing false information to investors.
Read Also: Ethereum Fraud: South Korean CEO of Wacon Arrested, Victims Are Elderly!
Stablecoin Fraud According to the SEC
SEC Chairman Gary Gensler has long warned about the risks associated with stablecoins.
Gensler explained that stablecoins could be used for illegal activities, harming the crypto ecosystem, and raising questions about market integrity.
Gensler also said that stablecoins could function like securities or bank deposits, meaning they should be more tightly regulated.
In a speech to the American Bar Association in 2021, Gensler emphasized that entities involved in stablecoins must be subject to securities rules.
Stablecoin Fraud: TrueCoin and TrustToken Agree to Pay Fines
In its statement, the SEC explained that TrueCoin and TrustToken agreed to pay fines of $163,766 each without admitting or denying the allegations. TrueCoin must also return $340,930 in illegal profits.
The SEC asserted that TrueCoin and TrustToken's actions put investors at great risk without clearly informing them. Jorge G. This case shows the importance of investors getting important information to make investment decisions.
Read Also: SEC Opposes FTX's Plan to Pay Creditors with Stablecoins
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