The U.S. Securities and Exchange Commission (SEC) has launched a legal case against Touzi Capital, an investment firm, over serious allegations of deceiving its investors about the liquidity and profitability of its cryptocurrency mining fund.
Allegations Against Touzi Capital
On November 29, the SEC revealed that Touzi Capital is accused of defrauding more than 1,200 investors nationwide, managing to raise nearly $95 million through securities offerings tied to its cryptocurrency mining activities. The SEC claims, however, that the firm misrepresented the actual conditions surrounding the investment.
Instead of utilizing the funds for legitimate mining operations, it is alleged that Touzi Capital funneled investor money into unrelated business ventures, straying away from its promised crypto initiatives. Additionally, the SEC argues that the firm misled investors about both the risks involved and potential returns, portraying these investments as stable and akin to high-yield money market accounts. In reality, the SEC described the fund as fraught with risk and lacking liquidity. Yet, Touzi Capital continued to attract new investors while its financial health began to decline.
Legal Developments
This development comes on the heels of a recent ruling in which a federal judge declined to dismiss a separate lawsuit by the SEC against another promoter involved in a fraudulent crypto mining scheme that totaled $18 million.
In the larger picture, Joe Lubin, the CEO of ConsenSys, has indicated that conflicts between cryptocurrency companies and the SEC might lessen if Donald Trump were to regain the presidency. Lubin believes that such a scenario could pave the way for significant financial relief for the industry moving forward. While he acknowledges not every case may resolve favorably, he remains hopeful that the overall financial strain on the sector could be notably alleviated.
Source: Cointelegraph
