SEC Settles Fraud Accusations With Archblock And TrueUSD Firms

According to CoinDesk, the U.S. Securities and Exchange Commission (SEC) has settled fraud accusations with firms associated with Archblock and the TrueUSD (TUSD) stablecoin. The related companies were also accused of offering and selling securities tied to TUSD without registering with the SEC. TrustToken and TrueCoin, now rebranded under Archblock, settled accusations that they misrepresented the backing of the TrueUSD stablecoin and offered securities tied to it without proper registration. The California-based firms did not admit or deny wrongdoing in the settlement. The SEC stated that the companies had claimed TUSD enjoyed one-to-one dollar reserves, while the stablecoin's issuer was instead investing in a speculative and risky offshore commodity fund. The companies agreed to pay $163,766 each in fines, and TrueCoin will return nearly $400,000 in profits and interest, pending federal court approval of the settlement. They have also agreed not to violate relevant securities laws. TrueCoin was the original issuer of TUSD, which later ended up in the hands of offshore firm Techteryx and currently has a market cap of nearly half a billion dollars. TrustToken operated a lending protocol, TrueFi, and the entities in the settlement are accused of engaging in unregistered offers and sales of securities involving TUSD through TrueFi. The SEC noted that they remained closely tied to the asset after transferring the stablecoin to another issuer. The SEC's complaint also mentioned that TrueCoin was partly responsible for the design and content of the TrustToken website, which included links to buy TUSD and invest in TrueFi. Both companies were aware of redemption problems with the stablecoin in 2022. Archblock did not immediately respond to a request for comment. Jorge G. Tenreiro, acting chief of the SEC’s Crypto Assets & Cyber Unit, stated that TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment. He emphasized that this case highlights the importance of registration, as investors in these products were deprived of key information needed to make fully informed decisions. At one point, more than 13% of TUSD were tied to profit-seeking opportunities on the TrueFi platform. TUSD slipped from its $1 dollar peg earlier this year.