The U.S. Securities and Exchange Commission has settled fraud accusations with firms associated with Archblock and the TrueUSD stablecoin. TrustToken and TrueCoin, now operating under Archbock, have agreed to settle accusations of misrepresenting the backing of the TrueUSD stablecoin and offering securities tied to it without proper registration with the SEC.
According to the SEC, the California-based firms did not admit or deny any wrongdoing but were accused of claiming that the TUSD stablecoin had one-to-one dollar reserves when, in reality, the issuer was investing in a risky offshore commodity fund. As part of the settlement, the companies agreed to pay fines of $163,766 each, and TrueCoin will return nearly $400,000 in profits and interest pending approval from a federal court. They have also committed to complying with relevant securities laws moving forward.
TrueCoin was originally the issuer of TUSD before it was acquired by offshore firm Techteryx, which now holds a market cap of almost half a billion dollars. TrustToken operated the TrueFi lending protocol, which was also mentioned in the SEC’s complaint. The entities involved in the settlement are accused of engaging in unregistered offers and sales of securities related to TUSD through TrueFi, even after transferring the stablecoin to another issuer.
The SEC highlighted that TrueCoin had a hand in designing the TrustToken website, which promoted the purchase of TUSD and investment in TrueFi. Both companies were aware of redemption issues with the stablecoin in 2022, according to the SEC. Archblock did not provide immediate comments when contacted via email.
Jorge G. Tenreiro, acting chief of the SEC’s Crypto Assets & Cyber Unit, emphasized the importance of registration in cases like this, where investors were exposed to undisclosed risks due to misrepresentations about the safety of the investment. The SEC’s complaint revealed that over 13% of TUSD was linked to profit-seeking opportunities on the TrueFi platform at one point.
The settlement serves as a reminder of the significance of transparency and adherence to securities laws in the crypto industry. Investors must have access to accurate information to make well-informed decisions about their investments. The actions taken by the SEC in this case demonstrate their commitment to protecting investors and maintaining the integrity of the market.