SEC Sues Touzi Capital Over $115 Million Securities Fraud – Details

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As a seasoned researcher with extensive experience in the financial industry and a keen interest in the digital asset market, this news about the SEC vs. Touzi Capital LLC and Eng Taing is quite concerning. The alleged mismanagement of funds, deception of investors, and securities law violations are not uncommon occurrences in the world of finance, but it’s always disappointing to see such incidents happening in the rapidly evolving crypto space.

The United States Securities and Exchange Commission (SEC) has accused Touzi Capital LLC, a crypto mining firm, and its leader Eng Taing, of breaking several securities laws. The SEC alleges that Touzi Capital and Mr. Taing misled investors and improperly used $115 million in investor funds.

SEC Vs. Touzi Capital And Eng Taing

On November 29, the SEC announced in a statement that Taing and Touzi Capital had been selling unregistered securities, specifically digital asset mining investment shares, to investors from 2021 up until early 2023. The defendants managed to gather around $95 million from more than 1,200 investors by marketing these securities as a means to finance a cryptocurrency mining operation.

Nonetheless, the commission asserts that Touzi Capital mishandled these funds, using some for activities not directly related to the business or personal expenses of Eng Taing. Simultaneously, the defendants allegedly deceived investors about the profitability of their claimed mining operations, which grappled with rising energy costs and equipment problems.

Independent of this action, Touzi Capital, spearheaded by Eng Taing, additionally obtained an investment of $23 million for a company specializing in debt restructuring. This new capital was pooled together with resources from multiple businesses.

The Securities and Exchange Commission claims that the defendants misled investors about the stability of investments that were in fact volatile and illiquid, but they were presented as secure high-yield money market accounts. Furthermore, Taing and Touzi persistently promoted these securities to investors, even when it appeared that their operation was failing.

The SEC’s Prayer 

In a lawsuit filed at the US District Court for the Southern District of California, the U.S. Securities and Exchange Commission (SEC) alleges that Touzi Capital and Eng Taing have been selling unregistered securities and violating sections 5(a) and 5(c) of the Securities Act of 1933. The pair is also accused of committing fraud in securities, which goes against Sections 17 (a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, as well as Rule 10b-5.

If proven guilty, the commission is proposing various sanctions for Touzi and Taing. These include a permanent ban on engaging in similar illegal activities (an injunction), potential orders to return any profits gained from misleading investments (disgorgement), fines, and a prohibition against Eng Taing serving as an officer or director of any company (officer and director bar).

From my perspective as an analyst, I’d like to share some insights about the crypto market’s current state. Today, it stands at approximately $3.32 trillion, having experienced a slight dip of 0.43% in the previous 24 hours. Despite this minor setback, the overall momentum remains positive.

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2024-12-01 14:41