The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Touzi Capital LLC, a cryptocurrency mining company, and its managing member, Eng Taing, for repeated violations of securities laws. The U.S. securities regulator says the defendants allegedly defrauded investors and misappropriated funds to the tune of $115 million.
SEC vs. Touzi Capital and Eng. Taing
In issuance of a court judgment On November 29, the SEC found that Taing and Touzi Capital offered unregistered securities to investors in the form of digital asset mining investment shares from 2021 to early 2023. The defendants raised approximately $95 million from more than 1,200 investors by promoting these securities as an opportunity to finance cryptocurrency mining operations.
However, the Commission explains that Touzi Capital mismanaged these funds and some of them were allocated to unrelated activities or spent on Eng Taing’s personal expenses. Meanwhile, the defendants also misled investors about the profitability of the alleged mining operations, which suffered from fluctuations in energy costs and equipment problems.
In a separate move, Eng Taing-led Touzi Capital also secured another $23 million investment in a debt settlement business that was similarly pooled with funds from various businesses.
The SEC alleges that the defendants deceived investors about the safety of the two investments, which were highly volatile and illiquid but were rather described as stable, high-yield money market accounts. Moreover, Taing and Touzi continually sold these securities to investors, even despite apparent operational failures.
SEC Prayer
In a formal complaint filed in the United States District Court for the Southern District of California, the U.S. securities regulator accuses Touzi Capital and Eng Taing of offering unregistered securities and violating Sections 5(a) and 5(c) of the Securities Act of 1993 . The defendants are also charged with committing securities fraud under Sec. 17 letter a) Securities Act of 1933 and Art. 10 lit. b) Securities Exchange Act of 1934 and Rule 10b-5.
If found guilty, the commission is seeking multiple penalties against Touzi and Taing, including a lasting injunction preventing the defendant from engaging in similar unlawful activities. Additionally, defendants could face dismissal if they are ordered to repay any profits made as a result of these misleading investments. Other possible penalties include civil fines and penalties for officers and directors against Eng Taing.
On a brighter note, the cryptocurrency market is currently valued at $3.32 trillion after a slight decline of 0.43% last day.
Featured image from Novian and Novian, chart from Tradingview
