Two crypto companies associated with the TUSD stablecoin have been charged with securities violations by the U.S. Securities and Exchange Commission (SEC). TrueCoin and TrustToken settled charges filed by the SEC, which alleged unregistered offerings and investment contract sales between November 2020 and April 2023. TrustToken is the creator of the decentralized finance lending platform TrueFi, which allows users to utilize TrueUSD, a stablecoin issued by TrueCoin.

SEC Allegations and Settlement

In a complaint dated September 24, the SEC stated that both companies employed misleading marketing tactics to promote TUSD and TrueFi as “safe and trustworthy” investment vehicles. Jorge G. Tenreiro, the SEC’s acting chief of its Crypto Assets and Cyber Unit, emphasized the importance of company registration for investor protection.

“This case underscores the necessity for company registration to safeguard investors,” said Tenreiro.

Industry Response and Legal Battles

The SEC’s actions have sparked significant debate within the crypto community. Market participants, including former SEC staff like Dan Gallagher, now chief attorney at Robinhood Markets, have often challenged the SEC’s stance. This ongoing conflict has led to legal battles involving prominent companies like Coinbase.

Lawmakers have also expressed concern over the SEC’s “regulation by enforcement” approach. SEC commissioner Hester Peirce has described the regulator’s strategy as inefficient and confusing.

Financial Penalties

Without admitting or denying the charges, TrueCoin and TrustToken agreed to pay fines totaling $163,766. Additionally, TrueCoin was penalized with an extra disgorgement of $340,930.

This settlement adds to the growing list of SEC fines imposed on the crypto industry. Since 2013, crypto businesses have paid over $7 billion in fines to the SEC. A recent study highlighted that crypto-related fines have surged more than 3,000% in the past year.

For more news on the cryptocurrency industry and regulatory updates, stay informed with Global Crypto News.

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