TrueUSD: Settlement between SEC and Stablecoin company

The stablecoin TUSD was apparently backed by risky funds. Now the responsible companies have reached a settlement with the SEC over a fine.

TrueCoin LLC and TrustToken Inc, the companies behind the stablecoin TrueUSD (TUSD), have a settlement struck with the U.S. stock market watchdog (SEC) in connection with allegations of fraud and unrecorded sales of investment contracts.

The SEC's complaint shows that TrueCoin and TrustToken were involved in unregistered offerings and sales of investment contracts with TUSD between November 2020 and April 2023, as well as "profit opportunities" related to the TrueFi lending protocol.

The SEC stated that the companies had falsely promoted TUSD as a safe investment, fully backed by U.S. dollars. In reality, 99 percent of the assets intended to back stablecoin were invested in a speculative offshore mutual fund, posing significant risks to customers. This investment was only suitable for those who could "bear the risk of losing most or all of their investment."

TrustToken will pay a fine of about $163,000. For TrueCoin, the fine is more than $530,000. However, the companies have neither admitted nor denied the allegations in the settlement.

TUSD currently has a market capitalization of nearly $500 million. Stablecoins, particularly Tether's USDT, have been able to grow strongly recently.