SEC sues Touzi Capital for deceiving investors and misusing $95 million in crypto mining funds, violating securities laws.
The United States Securities and Exchange Commission (SEC) has initiated legal action against Touzi Capital for allegedly misleading investors about the liquidity and profitability of its crypto asset mining fund. The SEC claims that Touzi Capital, led by its managing member Eng Taing, defrauded more than 1,200 US investors. In addition, it raised nearly $95 million through unregistered securities offerings. This legal action was made on November 29.
The SEC has filed a complaint in the United States District Court for the Southern District of California. It alleges that Touzi Capital and its chief, Eng Taing, had violated securities laws. The SEC alleges that the defendants misled investors about how their money was being used, commingling funds from different business operations, and making unsupportable assertions about the steadiness and returns from their investments.
From 2021 to February 2023, Touzi Capital managed to attract nearly $94.5 million for its crypto mining projects. However, the SEC claims that in addition to using the funds solely for mining, Taing and Touzi Capital combined them with funds from other businesses. They also spent part of the money for Taing’s own use.
Touzi Capital Faces SEC Charges for Misleading Crypto Investments
The SEC further alleges that Touzi Capital undertook to sell securities worth about $23 million for a debt rehabilitation project. Some of that cash was said to have been spent on crypto mining, which deceived investors. Taing and the firm stated that their investment was secure and as good as money market accounts with high returns. In fact, they were highly leveraged and illiquid.” Despite the fact that the investments were starting to become unprofitable, Touzi Capital started to attract new investors.
The SEC wants a civil penalty under the Securities Act of 1933 and the Securities Exchange Act of 1934. The complaint also seeks permanent restraining orders, rescission of the monetary transactions with prejudgment interest, civil penalties, and prohibition of Taing acting as an officer or director of any public corporation.
The investigation was conducted by Peter Del Greco accompanied by Lorraine Pearson and Nicholas Bohmann. Marc Blau oversaw the probe. The litigation team is headed by Jasmine M. Starr and is supervised by Douglas Miller.
This legal action shows that the SEC is serious with firms that engage in fraudulent activities in the cryptocurrency market. In addition, it raises awareness of the need to adhere to ethical standards and disclose all the information necessary for customers. Consequently, investors should remain vigilant and conduct thorough research before investing. This serves as a crucial reminder to be cautious, especially in complex and rapidly evolving sectors like crypto and blockchain.
