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TrueUSD firms dodge fraud claims with SEC settlement
Headline, true USD firm's Dodge Fraud Claims with SEC Settlement, published at 10.27am September 25, 2024 on Protos.com. Trust token and true coin have reached a $700,000 settlement with the US Securities and Exchange Commission after being accused of defrauding investors of stablecoin true USD. The SEC's complaint, filed on Tuesday, alleges that the firm's sent to USD's dollar backing to a speculative and risky offshore commodity fund, and that after true USD was acquired by Tech Terricks in late 2020, true coin remained involved in the stablecoin's operations until July 2023. During that period, the SEC believes the firms continued to insist that TUSD was backed one for one by US dollars. This settlement does not include true coin and trust token admitting or denying the allegations contained in the complaint. By the fall of 2022, true coin and trust token became aware of redemption problems at the commodity fund. The complaint continues. Despite allegedly becoming aware of these issues, the firms continued to represent TUSD as "backed dollar for dollar." Additionally, true coin is said to have received a portion of the interest earned on the TUSD reserves from Tech Terricks. This fund was apparently investing in a Hong Kong Trust, which invested in trade finance, structured trade, export finance, import finance, supply chain financing, and project financing of entities. Allegedly, a memorandum for this fund included a note that it was speculative and stated that it was only suitable for those who could bear the risk of losing most or all of their investment. By September 2024, more than 99% of the assets backing TUSD were invested in the Risky Commodity Fund. The fund appears to be provided by First Digital Trust in Hong Kong, a longtime true USD partner. Funds held at First Digital Trust are currently described in the attestations for TrueUSD as invested in other instruments to generate yield, which are made up of investments that may not be readily convertible to cash, subject to market conditions or fund performance. First Digital offers its own stable coin, First Digital USD FDUSD, which claims to be a one-to-one USD-backed stable coin. The complaint also cites TrueFi, a not-really DeFi lending market where investors could lend TUSD as evidence that TUSD was offered and sold as a security. Alameda Research was one of the lead investors in the TRU token, which had some utility in TrueFi. As part of the settlement with the SEC, TrueCoin and Trust token have agreed to USD 163,766 in civil penalties each. TrueCoin has also agreed to USD$340,930 with a prejudgment interest of USD$31,538. This recording was AI-generated. Get more crypto news at protos.com.