U.S. SEC Settles Charges Against TrueCoin LLC and TrustToken Inc.

The U.S. Securities and Exchange Commission (SEC) announced a settlement with TrueCoin LLC and TrustToken Inc. over the sale of the stablecoin TrueUSD (TUSD).

TrueCoin, an issuer of TrueUSD, and TrustToken, the developer of the lending protocol TrueFi, neither admitted nor denied the SEC’s allegations. Both companies agreed to pay $163,766 in penalties, with TrueCoin also paying an additional $340,930 in disgorgement.

From November 2020 to April 2023, they engaged in unregistered offerings and sales of investment contracts related to TUSD, falsely marketing the investment as safe and fully backed by U.S. dollars. However, a significant portion of the assets was invested in a speculative offshore fund.

Jorge G. Tenreiro, the acting chief of the SEC’s Crypto Assets & Cyber Unit, stated, “TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment.”

By the end of 2022, both companies were aware of issues with the TUSD redemption process but continued to mislead investors regarding its backing. The SEC noted that by September 2024, 99% of TUSD reserves were invested in the speculative fund.

SEC Chair Gary Gensler has compared stablecoins to money market funds and warned of potential illicit uses, alongside concerns over market integrity. He stated, “These platforms—whether in decentralized or centralized finance—are implicated by securities laws and must comply with our securities regime.”

Update: Sept. 24, 6:30 p.m. UTC to include detailed statements.