The United States regulator, the Securities and Exchange Commission (SEC), has initiated legal proceedings against investment firm Touzi Capital for allegedly deceiving investors by providing false information regarding the liquidity and profitability of its crypto asset mining fund.
According to a statement released by the SEC on November 29, Touzi Capital is accused of defrauding more than 1,200 investors in the United States through security offerings for its crypto asset mining fund, raising nearly $95 million.
The investment was purportedly marketed to investors as a means to finance crypto mining operations. However, the SEC asserts that this claim was false. Instead, Touzi Capital allegedly mixed investor funds with those of its subsidiary businesses, diverting the money towards ventures unrelated to crypto mining.
The SEC also accused Touzi Capital of misleading investors about the risks involved and the profitability of its crypto mining asset fund. According to the SEC, the defendants made materially false and misleading statements about the stability of these investments, comparing them to high-yield money market accounts.
The SEC stated that the fund was both risky and illiquid, and yet Touzi Capital continued to accept new investors even after its investments began to fail.
This development follows a US federal judge’s rejection of an appeal to dismiss a SEC lawsuit against a promoter of an allegedly fraudulent crypto mining company involved in an $18 million scheme. The promoter, Kristoffer Krohn, argued that the SEC had failed to establish that the Green Boxes were securities offerings or investment contracts in its complaint.
However, Consensys CEO Joe Lubin believes that the ongoing legal disputes between crypto firms and the SEC will likely diminish if Donald Trump is reelected as the 47th president of the United States. Lubin expressed his belief that the industry could save hundreds of millions of dollars in the future, although he acknowledged that not all cases or elements of cases would be affected. He made these comments to Cointelegraph during the DevCon 2024 conference in Thailand.