- • The United States Securities and Exchange Commission (SEC) charged TrueCoin LLC and TrustToken Inc., companies behind the TrueUSD (TUSD) stablecoin, with fraudulent and unregistered sales of investment contracts
- • The SEC called TrueUSD a “purported stablecoin” and accused the firms of false marketing claims related to the safety and backing of the dollar-pegged crypto asset
- TrueCoin and TrustToken have settled the charges without admitting or denying the allegations and will collectively pay approximately $700,000 in penalties
The U.S. Securities and Exchange Commission (SEC) has charged the companies behind the TrueUSD (TUSD) stablecoin, TrueCoin LLC and TrustToken Inc., with fraudulent and unregistered sales of investment contracts related to the crypto asset. The regulator alleges the firms made false claims about the backing and stability of the dollar-pegged token.
Background on the SEC Charges:
The SEC called TrueUSD a “purported stablecoin” in announcing the charges on Tuesday. The regulator accused TrueCoin and TrustToken of seeking profits for themselves while exposing investors to substantial undisclosed risks through misrepresentations about the safety of the investment.
According to the SEC, this case highlights why registration matters, as investors continue to lack key details needed to make fully informed decisions about crypto assets like stablecoins. TrueCoin and TrustToken have settled the charges without admitting or denying the allegations, agreeing to pay approximately $700,000 in penalties.
Details of the SEC Allegations:
Specifically, the SEC alleges that TrueCoin and TrustToken falsely claimed that TrueUSD was backed 1-to-1 by U.S. dollars held in bank accounts. However, the regulator says TrueUSD reserves held far less than the amount of tokens in circulation at various times.
The SEC also accused the companies of falsely claiming that TrueUSD could be freely redeemed for U.S. dollars. In reality, the regulator says redemptions were halted at certain points.
Additionally, the SEC alleges that TrueCoin and TrustToken misled investors by claiming every TrueUSD token was backed by U.S. dollars, when some tokens were backed by unspecified “other assets.”
Conclusion:
The SEC’s charges against TrueCoin and TrustToken provide another example of the regulator cracking down on crypto companies for allegedly misleading marketing claims. Stablecoins like TrueUSD promise stability amid crypto market volatility, but require trustworthy backing and transparency to deliver. This case reinforces why clear disclosures and regulatory compliance are critical in crypto.
