SEC Fines TUSD Stablecoin Issuer
The SEC has charged TrueCoin and TrustToken with offering unregistered securities in the form of the TUSD stablecoin.
According to a notice posted early on September 25, the US Securities and Exchange Commission (SEC) said it had fined TrueCoin LLC and TrustToken Inc. - both now renamed Archblock - to settle securities charges against the TUSD stablecoin.
TrueCoin was the original issuer of TrueUSD (TUSD), while TrustToken developed the TrueFi lending platform that integrated TUSD. Both companies have neither admitted nor denied the SEC's allegations, but agreed to pay a fine of $163,766 each, with TrueCoin paying an additional $340,930 in illicit profits.
TrueCoin later transferred management of TUSD to another company called Techteryx, which is rumored to be linked to Justin Sun.
The US Securities and Exchange Commission asserted that between November 2020 and April 2023, TrueCoin and TrustToken conducted illegal securities offerings in the form of the stablecoin TUSD, as well as profited from TUSD through lending services on TrueFi. The SEC also accused the two companies of making false promotional statements, saying that this was a safe and reliable investment option, fully backed by US dollars and equivalent assets, but in fact, most of the assets they held were high-risk investments in foreign investment funds to earn additional profits.
By the end of 2022, TrueCoin and TrustToken had problems processing withdrawals for customers, but continued to make false statements to reassure investors.
The SEC announced that as of September 2024, 99% of the assets backing TUSD were allocated to high-risk investment funds.
TUSD was once chosen by Binance as a stablecoin to replace BUSD after the latter was also accused of being a security by the SEC and had to stop operating in February 2023. During the following period, TUSD's market capitalization increased from less than $1 billion to a peak of $3.8 billion in October 2023 with 90% of the total supply on Binance, before the exchange gradually separated it to switch to an alternative solution, FDUSD. At the time of writing, TUSD's market capitalization is only approximately $500 million.
TUSD price did not fluctuate much after the news of TrueCoin and TrustToken companies being sanctioned by the SEC, holding steady near the $1 mark.
