SEC Charges Crypto Companies TrustToken and TrueCoin With Defrauding Investors Regarding Stablecoin Investment Program: SEC

The complaint further alleges that TrueCoin and TrustToken falsely marketed the investment opportunity as safe and trustworthy by claiming that TUSD was fully backed by U.S. dollars or their equivalent, when in fact a substantial portion of the assets purportedly backing TUSD had been invested in a speculative and risky offshore investment fund to earn additional returns for the defendants. The complaint alleges that, by approximately March 2022, after the TUSD operations had been sold to an offshore entity, that entity and TrueCoin had invested more than half a billion dollars of the assets purportedly backing TUSD in the speculative fund, and that, by Fall 2022, TrueCoin and TrustToken became aware of redemption problems at the offshore fund but continued to make false statements to investors casting TUSD as backed one-for-one by U.S. dollars. As alleged, by September 2024, 99% of the reserves backing TUSD were invested in the speculative fund.