SEC Sues Crypto Mining Company Touzi Capital For $115 Million Fraud

The US Securities and Exchange Commission (SEC) has filed a lawsuit against Touzi Capital LLC, accusing them of orchestrating a $115 million securities fraud. 

The SEC’s lawsuit against Touzi and its founder, Eng Taing, was filed in a federal district court in San Diego on 29 November 2024.

The SEC has accused Touzi Capital of scamming over 1,200 crypto investors, alleging that funds promised for mining were instead used for other expenses.

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“Touzi allegedly raised almost $23 million for its debt rehabilitation business but commingled some of those funds with those of its crypto asset mining businesses and other unrelated Touzi businesses,” the SEC’s complaint said.

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Investors Were Assured That Bitcoin Mining Would Cost $8000 To $10,000 Per BTC

The complaint alleges that Taing misled investors by promising that their funds would be used for debt rehabilitation projects or cryptocurrency mining businesses. 

Investors were assured that bitcoin could be mined at costs ranging from $8,000 to $10,000 per bitcoin over the next decade. Apparently, this would help leveraging contracts for inexpensive electricity. Importantly, the claim that bitcoin could be mined at significantly lower costs was a critical selling point for attracting investors. 

The core of the SEC’s allegations revolves around misleading statements made to investors. 

Taing allegedly portrayed an overly optimistic scenario where investments would yield substantial returns through bitcoin mining and debt rehabilitation ventures.

However, these claims were reportedly based on false premises and unrealistic projections.

Hence, the SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each of the defendants.

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SEC Increased Scrutiny On Digital Asset Firms 

This is part of a broader trend of increased regulatory scrutiny by the SEC on cryptocurrency-related activities. 

In 2023 alone, the SEC initiated 46 enforcement actions related to digital assets. This marks a 53% increase from the previous year. 

Importantly, the SEC’s action against Touzi Capital is another development in its ongoing efforts to regulate crypto firms.

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The Commission has filed a total of 583 enforcement actions in fiscal year 2024. This is a 26% drop from the 787 cases filed in 2023. The list includes 431 stand-alone cases, 93 follow-on proceedings to bar or suspend individuals, and 59 cases targeting companies delinquent in required filings. According to the report, despite this decline, the financial remedies secured far surpassed prior years with a record breaking $8.2 billion in civil penalties. Was this possible because crypto firms were targeted?

In a related development, President-elect Donald Trump has pledged to overhaul the SEC’s leadership.

Trump has criticized the agency’s regulatory stance and promised to replace the current Chair, Gary Gensler. He has also expressed ambitions to make the US the global leader in cryptocurrency innovation.

Explore: SEC Returns $4.6M to Investors of Ethereum based Bitclave ICO

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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