TrustToken and TrueCoin, two companies associated with the TUSD stablecoin, have recently faced charges of securities violations from the U.S. Securities and Exchange Commission (SEC). The SEC alleged that TrustToken and TrueCoin engaged in unregistered offering and investment contract sales between November 2020 and April 2023. TrustToken is known for creating the decentralized finance lending platform TrueFi, which allows users to use TrueUSD (TUSD), a stablecoin issued by TrueCoin.
In a complaint filed on Sept. 24, the SEC accused both companies of using deceptive marketing tactics to promote TUSD and TrueFi as secure and reliable investment options. Jorge G. Tenreiro, the acting head of the SEC’s Crypto Assets and Cyber Unit, emphasized the importance of company registration in protecting investors. However, some members of the crypto community, including former SEC staff like Dan Gallagher, have criticized the SEC’s approach to regulation.
The legal battles between the SEC and crypto companies, such as Coinbase, have raised concerns among lawmakers. There have been calls for the securities agency to reevaluate its enforcement-focused regulatory strategy, with SEC commissioner Hester Peirce describing it as inefficient and confusing. Despite the ongoing debate, TrueCoin and TrustToken agreed to settle the charges without admitting or denying guilt. They will pay fines totaling $163,766, with TrueCoin facing an additional disgorgement of $340,930.
This settlement is part of a larger trend of increasing SEC fines within the crypto industry. Since 2013, crypto businesses have paid the SEC over $7 billion in fines, with a recent study showing a more than 3,000% surge in crypto-related fines over the past year. The case of TrustToken and TrueCoin highlights the regulatory challenges facing the crypto sector and the need for clearer guidelines to ensure investor protection and industry compliance.
