SEC v. TRUECOIN LLC; and TRUSTTOKEN, INC., No. 3:24-cv-06684, Northern District of California (Sept. 25, 2024) — Complaint

CASE NO.  1 COMPLAINT
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JORGE G. TENREIRO (N.Y. Bar No. 4466991)
   [email protected]
JAMES P. CONNOR (D.C. Bar No. 981864)
   [email protected]
MICHAEL J. FRIEDMAN (N.Y. Bar No. 4297461)
   [email protected]
100 F Street, N.E.
Washington, D.C. 20549
Telephone: (202) 551-7977

Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
SECURITIES AND EXCHANGE
COMMISSION,

  Plaintiff,

 v.
TRUECOIN LLC and TRUSTTOKEN, INC.

  Defendants.

Case No. C-

COMPLAINT

Plaintiff Securities and Exchange Commission (the “SEC” or the “Commission”) alleges:
SUMMARY
1. From November 2020 through at least April 2023 (the “Relevant Period”),
defendants TrueCoin LLC (“TrueCoin”) and TrustToken, Inc. (“TrustToken”) (collectively
“Defendants”) illegally offered and sold securities without registering those offerings with the
SEC, as required by federal law.  These securities were investment contracts involving crypto
assets called TrueUSD (“TUSD”) and profit-making opportunities with respect to TUSD on
“TrueFi,” a so-called lending protocol from which Defendants stated investors could earn
interest by loaning TUSD.
2. Defendants also defrauded investors by, among other things, falsely claiming that
TUSD was backed “1:1” by U.S. dollars.  In reality, based on a recommendation from their

CASE NO. 2 COMPLAINT

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investment adviser, and in order to earn a return for themselves from the proceeds of TUSD
sales, Defendants had invested a substantial portion of the assets purportedly backing TUSD (the
“TUSD reserves”) in a speculative and risky offshore commodity fund (“Commodity Fund”),
which purportedly invested in trade finance and other related financing ventures.
3. In December 2020, TrueCoin sold the TUSD operations to an unaffiliated
offshore entity (“Offshore TUSD Entity”), but TrueCoin remained heavily involved in the TUSD
operations until at least July 2023.  During that time, the Offshore TUSD Entity and TrueCoin
significantly increased the amount of TUSD reserves invested in the increasingly risky
Commodity Fund, but the Defendants continued to mislead investors into thinking it was safe to
invest in the investment contracts by falsely and publicly claiming that TUSD was backed one-
for-one by U.S. dollars.
4. In furtherance of the fraud, Defendants included links on the TrustToken website
(trusttoken.com) to the Offshore TUSD Entity’s accountants’ “attestation reports,” which
included reports that misleadingly indicated that the TUSD reserves exceeded the amount of
TUSD outstanding, without disclosing the increasingly risky nature of investing the assets
backing TUSD in the Commodity Fund.
5. By the fall of 2022, TrueCoin and TrustToken became aware of redemption
problems at the Commodity Fund—imperiling redemptions of the TUSD reserves and calling
into question whether the Commodity Fund investment was impaired—yet TrueCoin and
TrustToken continued to make false statements casting TUSD as backed dollar-for-dollar while
making material misstatements omitting material information regarding the redemption issues at
the Commodity Fund.
6. TrueCoin and TrustToken terminated their relationship with the Offshore TUSD
Entity in July 2023, but the Offshore TUSD Entity continues to offer TUSD to the public.  After
July 2023, when Defendants were no longer involved in the TUSD operations, there were a
number of large redemptions of TUSD.  By September 2024, more than 99% of the assets
backing TUSD were invested in the risky Commodity Fund, such that TUSD is not backed “1:1”
by U.S. dollars.

CASE NO. 3 COMPLAINT

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VIOLATIONS
7. By engaging in the conduct set forth in this Complaint, Defendants engaged in the
unlawful offer and sale of securities in violation of Sections 5(a) and 5(c) of the Securities Act of
1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and 77e(c)].
8. The Defendants’ conduct also violated certain antifraud provisions of the federal
securities laws: Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(2) and
77q(a)(3)].
9. Unless Defendants are permanently restrained and enjoined, they will continue to
engage in the acts, practices, and courses of business set forth in this Complaint and in acts,
practices, and courses of business of similar type and object.
JURISDICTION, VENUE, AND INTRADISTRICT ASSIGMENT
10. The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C.
§ 1331 and Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)].
11. The Defendants, directly or indirectly, made use of the means or instrumentalities
of transportation or communication in interstate commerce or of the mails in connection with the
transactions, acts, practices, and courses of business alleged herein.
12. Venue in this District is proper pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] because the Defendants were located in and transacted business within this
District, and because acts, practices and transactions constituting the violations of law alleged in
this Complaint occurred within the Northern District of California.
13. Under Civil Local Rule 3-2, this civil action should be assigned to the San
Francisco Division because a substantial part of the events or omissions giving rise to the claims
occurred in San Mateo County, where the Defendants operated their principal place of business.
DEFENDANTS
14. TrueCoin is  a Delaware limited liability company with a principal place of
business in Burlingame, California.  TrueCoin has not filed any registration statements with the
Commission.

CASE NO. 4 COMPLAINT

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15. TrustToken is  a Delaware corporation with a principal place of business in
Burlingame, California.  TrustToken has not filed any registration statements with the
Commission.
STATUTORY AND REGULATORY FRAMEWORK
16. The Securities Act sets forth a regime of full and fair disclosure, in contrast to
traditional commercial principles of caveat emptor.  Congress mandated that persons who offer
and sell securities to the investing public provide sufficient, accurate information to allow
investors to make informed decisions before they invest.
17. The definition of a “security” under federal securities laws includes a wide range
of investment vehicles, including “investment contract[s].”  15 U.S.C. § 77b(a)(1).  An
investment contract exists when there is the investment of money in a common enterprise with a
reasonable expectation of profits to be derived from the efforts of others.  SEC v. W.J. Howey
Co., 328 U.S. 293, 299 (1946).  Courts have found that novel or unique investment vehicles
constitute investment contracts, including interests in orange groves, animal breeding programs,
railroads, mobile phones, and enterprises that exist only on the internet, including crypto assets.
18. Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)]
require that an issuer of securities register the offer or sale of securities with the Commission.
Registration statements provide investors with important information about the securities,
including the terms of the offering, and the issuer’s business operations, financial condition,
results of operations, risk factors, and management.  The Securities Act prohibits persons from
engaging in the unregistered offer and sale of securities in interstate commerce unless an
exemption from registration applies.
19. Sections 17(a)(2) and 17(a)(3) of the Securities Act [ 15 U.S.C. §§ 77q(a)(2) and
77q(a)(3)] prohibit fraud and misrepresentations in the offer or sale of securities in interstate
commerce by, among other things, obtaining money or property by means of any untrue
statement of material fact or any omission of material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading; and
engaging in transactions, practices, or courses of business which operate or would operate as a

CASE NO. 5 COMPLAINT

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fraud or deceit upon the purchaser.

FACTS

I. Defendants Offered and Sold TUSD Together With Profit-Making
Opportunities on TrueFi in Unregistered Transactions.
20. TrueCoin—the original issuer of TUSD—and TrustToken—the developer and
operator of TrueFi—were both subsidiaries of the same parent company (“Parent Company”).
The Defendants shared common ownership and management, and shared employees and office
space.
21. While TrueCoin and TrustToken were legally distinct entities, they disregarded
corporate formalities and during the Relevant Period acted together to offer and sell investment
contracts to investors by promoting TUSD and investors’ potential to profit from their purchase
of TUSD by lending that TUSD on TrueFi to earn interest.
22. Starting in March 2018, before the launch of TrueFi in November 2020,
Defendants began offering the TUSD crypto asset for a price of one dollar.  TUSD was marketed
as a so-called “stablecoin,” meaning that its price is meant to be pegged to $1.
23. TUSD was offered and sold on an internet website maintained by Defendants in
exchange for the transfer of money to a bank or trust account held by TrueCoin.  Shortly after the
launch, TUSD could be traded—and was traded—on various crypto asset platforms, including
some located in the United States.
24. Starting in November 2020, Defendants began operating TrueFi, a platform for
lending crypto assets, where investors could make uncollateralized loans (where the borrower
does not put up any security such as property or other assets in exchange for the loan) of TUSD
and other crypto assets in exchange for interest paid in the loaned crypto asset.  Investors could
access TrueFi via the TrueFi website (truefi.io) and via an app maintained by TrustToken and
available to U.S. persons.
25.  In December 2020, TrueCoin sold the operations of TUSD to the unaffiliated
Offshore TUSD Entity.  After the sale, the Offshore TUSD Entity offered TUSD directly from
its website and TrustToken continued to do so as well, as it had before the sale.  As described in

CASE NO. 6 COMPLAINT

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a July 2023 social media post from the Parent Company announcing the final step in the transfer
of the TUSD business to the Offshore TUSD Entity: “[The Parent Company] team has continued
to support the TUSD business with its operations and compliance, as well as oversight of
TUSD’s banking and fiduciary partners, following the transfer of ownership in late 2020.”
26. In addition, TrueCoin’s ongoing involvement with TUSD operations included
performing know-your-customer and anti-money laundering checks, maintaining a support team,
providing blockchain support, “minting” (or creating) and redeeming TUSD, and maintaining
audit and regulatory compliance services.
27. TrueCoin was also at least partly responsible for the design and content of the
TrustToken website, which included links to buy TUSD and invest in TrueFi.
28. An officer for the Parent Company, who was also a director for TrueCoin and
TrustToken (“Officer 1”), also represented the Offshore TUSD Entity as an authorized person
after the sale of the TUSD business to the Offshore TUSD Entity.  Officer 1’s duties as an
authorized person for the Offshore TUSD entity included making decisions concerning TUSD
reserves and signing holdings reports on behalf of the Offshore TUSD Entity that were attached
to the attestation reports—accountants’ reports purporting to provide details of where and how
the assets backing TUSD were held, and verification that those assets exceeded the TUSD
outstanding.
29. TrueCoin further received from the Offshore TUSD Entity a portion of the
interest earned on the TUSD reserves invested in the Commodity Fund through revenue sharing
payments, as well as monetary incentives when the amount of TUSD issued (i.e., the amount of
TUSD sold to investors) hit certain thresholds.  These revenues flowed from TrueCoin to the
Parent Company, and TrustToken received a portion of these funds because the Parent Company
used its revenues to fund the general operations of TrustToken and TrueCoin.
30. TUSD purchasers who wanted to earn a yield on their TUSD could lend the
TUSD to a TUSD pool on the TrueFi platform for the stated loan period and earn a pro rata
return.
31. Throughout the Relevant Period, Defendants touted TUSD together with TrueFi

CASE NO. 7 COMPLAINT

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as a way for investors to make money.
32. For example, in a Medium post discussing the launch of TrueFi, the TrustToken
team wrote: “At launch on November 21st, 2020, TrueFi provided for ... TrueUSD lenders to
earn attractive APY [annual percentage yield]” on TUSD loaned through the protocol.
33. TrustToken described TrueFi profit opportunities for TUSD in a March 2021
Medium blog post: “we are committed to further enhancing TrueFi as one of the safest protocols
in the industry for obtaining capital-efficient loans, making it even more attractive to borrowers
and lenders alike.”  The blog post further noted that TrueFi had serviced nearly $100 million of
TUSD loans.
34. The TrueFi website, which TrustToken operated, advertised an estimated APY for
a TUSD-denominated loan on TrueFi at 21.37%.  During much of the relevant period, the
TrustToken website (trusttoken.com), which the Defendants operated, also promoted the
opportunity and advertised TUSD and TrueFi by stating: “Lend to earn high, stable returns on
TUSD.”  The TrueCoin website (truecoin.com), which was available to U.S. persons, redirected
potential investors to the TrustToken website.
A. Investors Invested Money
35.  During the Relevant Period, investors tendered U.S. dollars to Defendants and
the Parent Company to purchase TUSD through publicly available websites.  From inception
through December 2, 2020, TrueCoin minted more than 302 million TUSD in exchange for U.S.
dollars.  Likewise, by October 2023, more than 3 billion TUSD had been minted in exchange for
U.S. dollars, which includes TUSD purchases made through the TrustToken website.
36. As noted, investors then loaned their TUSD on the TrueFi platform to earn the
returns advertised by Defendants.  By the end of 2021, more than 78 million TUSD, or
approximately 6% of the outstanding TUSD, was purportedly loaned on the TrueFi protocol.  At
its peak, approximately 13.5% of TUSD was deployed in profit-making opportunities in the
TUSD pool on the TrueFi platform.
B. Investors Invested in a Common Enterprise
37. Investors were offered an opportunity to participate in a common enterprise by

CASE NO. 8 COMPLAINT

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purchasing TUSD and earning interest on it, and those who purchased TUSD and elected to lend
it on TrueFi did, in fact,  enter in a common enterprise with other investors who so chose, and
with Defendants.
38. Investors’ financial fortunes were tied to the fortunes of other investors.  TUSD
holders who sought to earn returns pooled their TUSD in TrueFi’s TUSD lending pool, and those
assets where therein commingled and used indistinguishably to earn interest equally for all
investors, proportional to their investments.  If the investment did well, all investors obtained
returns equally and in proportion to their investments.  If the investments did poorly, all investors
suffered losses equally.
39. Investors’ fortunes were also tied to Defendants’ fortunes.  TrustToken itself
invested directly in TrueFi’s TUSD lending pool, alongside other TUSD lending pool investors,
to earn a pro rata return on their TUSD in the pool.  Further, the value of TrueFi’s so-called
governance token, a crypto asset TrustToken issued and held, was linked to the success of the
TrueFi platform—as increased use of the TrueFi platform would require increased of the TrueFi
governance token, thereby driving up demand for the token.  Thus, if the TrueFi platform did
well, Defendants further profited, at the same time as investors profited.
C. Investors Reasonably Expected To Profit From Defendants’ Efforts
40. Investors had a reasonable expectation of profits ( in the form of interest earned in
the TUSD TrueFi lending pool) from TrustToken’s managerial and entrepreneurial efforts to
develop and operate the TrueFi platform to ensure the availability of lending opportunities to
generate profits in the form of interest.
41. As set forth above, Defendants made numerous statements promoting the
opportunity for TUSD purchasers to profit on the TrueFi platform, and TrustToken did in fact
work to ensure the success of the TrueFi platform, including by acting as an intermediary for
TrueFi contracts and vetting and onboarding institutional customers.  TrustToken also operated
the TrueFi website and mobile application, and frequently promoted TrueFi to the public,
including U.S. investors.  This included: (a) onboarding potential borrowers of TUSD and other
crypto assets; (b) maintaining the software code for TrueFi; (c) overseeing TrueFi’s

CASE NO. 9 COMPLAINT

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communication functions and governance proposals; (d) operating TrueFi social media accounts;
and (e) helping institutional investors to interact with TrueFi.
42. Defendants’ statements and actions, and the economic reality of the arrangements
with respect to TUSD and TrueFi, have led investors to expect Defendants to undertake
significant and essential technical, managerial, and entrepreneurial efforts to achieve profits for
all investors.
43. Defendants have used interstate commerce to offer and sell these investment
opportunities by, among other things, engaging in a general solicitation through social media and
the TrustToken website widely available to U.S. investors.
44. Defendants have never had a registration statement filed or in effect with the SEC
for their offers and sales of securities, and no exemption from registration applied or applies.

II. Defendants Defrauded Investors By Falsely Claiming That TUSD Was “Fully
Collateralized” and Backed “1:1” By U.S. Dollars.
45. TrustToken and TrueCoin each made, and obtained money or property by means
of, materially false and misleading statements to investors.
46. Specifically, Defendants falsely stated: (1) that TUSD was backed “1:1” with U.S.
dollars, when they knew or should have known that a substantial portion of the TUSD
outstanding was invested in the illiquid and risky Commodity Fund; and (2) that TUSD was fully
collateralized, when they knew or should have known that a substantial portion of the TUSD
reserves were at risk because of redemption issues at the Commodity Fund.
A.  Background on the Investment in the Risky Commodity Fund
47. TrueCoin custodied the TUSD reserves—the proceeds from sales of TUSD that
purportedly “backed” the token—with certain trust companies, including a Hong Kong trust
(“Hong Kong Trust”), and entered into agreements with parameters for holding or investing the
TUSD reserves, including that the “Hong Kong Trust” could engage an investment adviser to
manage the TUSD reserves.
48. In March 2020, the Hong Kong Trust investment adviser recommended that
TUSD assets be invested in the Commodity Fund, to obtain a return on the capital, and TrueCoin

CASE NO. 10 COMPLAINT

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authorized the investment.
49. The Commodity Fund purportedly invested in trade finance, structured trade,
export finance, import finance, supply chain financing, and project financing of entities.  A
private placement memorandum for a share class of the Commodity Fund in which the TUSD
reserve funds were invested stated: “[s]hares of the Fund are speculative and involve risks
suitable only for financially sophisticated investors who are able to bear the risk of losing most
or all of their investment.”
50. The Commodity Fund was not a highly liquid investment because it would only
aim to honor redemption requests on a quarterly basis, meaning that an investor in the
Commodity Fund may have needed to wait months to redeem shares for money, such as U.S.
dollars.
51. Defendants did not disclose to the public the investment of the assets backing
TUSD in the Commodity Fund.  Instead, as described below, Defendants falsely stated to the
public that the assets backing TUSD included U.S. dollars and cash equivalents including highly
liquid investments that could be readily converted to known amounts of cash.
52. After the Offshore TUSD Entity purchased the TUSD operations in December
2020, the Offshore TUSD Entity, with the knowledge and involvement of Officer 1, invested
increasingly more of the TUSD reserves in the Commodity Fund.  By approximately March
2022, for example, the Offshore TUSD Entity had invested $565 million of the TUSD reserves
in the Commodity Fund, representing approximately 37% of the face amount of the TUSD
tokens outstanding.

B. The Materially False and Misleading Statements and Other Fraudulent
Conduct
53. As noted, TrueCoin, TrustToken, and their agents marketed their investment
opportunity as safe and trustworthy, in part by marketing that TUSD would retain a value of one
dollar and, more importantly, according to Defendants and their agents (including the
TrustToken website in February 2021 and on other dates), remain “fully collateralized.”
54. TrueCoin retained accounting firms to provide “real-time” attestation services for

CASE NO. 11 COMPLAINT

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the TUSD reserves.  As part of these services, the accounting firms generated “attestation
reports,”  which included “holdings reports” purporting to show an up-to-date snapshot of the
TUSD reserves and TUSD outstanding.  These reports allowed the public to compare the number
of TUSD sold with the amount of U.S. dollar assets backing TUSD, in order to demonstrate that
TUSD was purportedly fully backed by dollars or by highly liquid investments that could readily
be converted to dollars.
55. TrustToken and the Offshore TUSD Entity provided links on their websites to
download the attestation reports and holdings reports.
56. Potential purchasers were falsely assured by these reports that the TUSD reserves
exceeded the TUSD outstanding.  It was undisclosed in the holdings reports that a significant
portion of the TUSD reserves were invested in the risky Commodity Fund, which the attestation
reports were valuing at cost without considering any adjustments.
57. The then-  TrustToken CEO, who was also a TrueCoin director (“Officer 2”),
signed holdings reports on behalf of TrueCoin that were included in certain of these attestation
reports, including one on December 2, 2020, representing that the amount of “US Dollars held in
Trust Account(s)” was approximately $332.5 million, whereas the amount of TUSD then issued
and backed was approximately $302.1 million.  In other words, the report represented that TUSD
was over-collateralized and fully-backed by U.S. dollars—indicating, among other things, that
TUSD holders could redeem their TUSD back to U.S. dollars readily and reliably.
58. The Commodity Fund investment at that time was not disclosed in that holdings
report, but a footnote to that report stated that “[t]he USD balance includes USD cash and cash
equivalents that include short-term, highly liquid investments of sufficient credit quality that are
readily convertible to known amounts of cash.”
59. As Defendants knew or should have known, this statement was false, because the
Commodity Fund was not readily convertible to cash and was not a “cash equivalent” nor highly
liquid, since, among other reasons, redemptions could take up to 90 days.
60. Reasonable investors, including before investing in Defendants’ securities, would
have wanted to know that TUSD reserves w ere not, in fact, invested in “highly liquid

CASE NO. 12 COMPLAINT

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investments of sufficient credit quality that are readily convertible to known amounts of cash,”
and would have wanted to know that TUSD reserves were actually invested in the risky
Commodity Fund.
61. Defendants nevertheless made additional materially false and misleading
statements in connection with their offer and sale of their securities.
62. In the March 2021 Medium blog post, for example, TrustToken falsely claimed
that the TrueFi platform included a feature that enabled “decentralized finance” applications “to
automatically verify on-chain that each TUSD stablecoin is backed 1:1 with US dollars held in
reserve,” even though at the time certain of the TUSD reserves were already invested in the risky
Commodity Fund.  Again, TrustToken knew or should have known that its statements about the
assets backing TUSD were false.  Reasonable investors would have wanted to know that TUSD
was not, in fact, backed 1:1 with U.S. dollars because TUSD reserves were invested in the risky
Commodity Fund.
63. Similarly, in a June 3, 2022, interview posted on YouTube, when at least $565
million of the TUSD reserves had been invested in the Commodity Fund, Officer 2 stated: “you
hold one TrueUSD, it’s backed by one actual U.S. dollar.”  Defendants knew or should have
known that these statements were false, because they knew or should have known the amount of
TUSD reserves invested in the Commodity Fund at that point.  Reasonable investors would have
wanted to know that TUSD was not, in fact, “backed by one actual U.S. dollar” because TUSD
reserves were invested in the risky Commodity Fund.
64. On August 31, 2022, the Offshore TUSD Entity sought to redeem the maximum
amount of the TUSD reserves invested in the Commodity Fund because the Offshore TUSD
Entity had concluded that it should “exit from [Commodity Fund] exposure, which is not
conducive to our liquidity and risk control requirements for TUSD.”  Officer 1 was copied on the
redemption request.
65. By October 2022, the Commodity Fund had failed to timely honor redemption
requests for the TUSD reserves invested in the fund, despite repeated requests from Officer 1 and
the Offshore TUSD Entity.  By March 3, 2023, Officer 1 complained to an investment adviser

CASE NO. 13 COMPLAINT

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with the Hong Kong Trust: “At this stage we should have received nearly another 150m as per
the original discussion from last year,” and “this is not a little longer than the 90 days you
promised me which is so disappointing.”
66. Despite the increasingly dire situation of the Defendants’ investment in the
Commodity Fund, which Defendants knew or should have known, later holdings reports attached
to the TUSD attestation reports continued to mischaracterize the Commodity Funds investment
as “short-term, highly liquid investments of sufficient credit quality that are readily convertible
to known amounts of cash,” when individuals at TrustToken and TrueCoin knew or should have
known that (i) the Commodity Fund investment was not highly liquid, and (ii) by the fall of
2022, due to liquidity issues with the Commodity Fund and delays with redemption requests, the
Commodity Fund investment was not readily convertible to known amounts of cash.
67. For example, a March 27, 2023, attestation report, which included a holdings
report signed by Officer 1, stated: “[t]he USD balance ... includes USD cash, cash equivalents
and short-term, highly liquid investments of sufficient credit quality that are readily convertible
to known amounts of cash,” and investments in other instruments to generate yield.  As
Defendants knew or should have known, this statement was false and misleading.  Indeed,
Officer 1 and the Defendants were aware of the liquidity issues and problems with redemptions
at the Commodity Fund, which represented approximately 24% of the TUSD reserves at that
time.  Reasonable investors would have wanted to know that TUSD reserves were invested in the
risky Commodity Fund and its ongoing liquidity and redemption issues.
68. The TrustToken website continued to falsely claim that TUSD was “100%
collateralized” and “fully collateralized” through at least May 2023.  The Defendants knew or
should have known that these statements were false and misleading.  Reasonable investors would
have wanted to know that TUSD was not, in fact, “fully collateralized” because TUSD reserves
were invested in the risky Commodity Fund.

FIRST CLAIM FOR RELIEF
Violations of Section 5(a)   and 5(c) of the Securities Act
[15 U.S. Code §§ 77e(a) and 77(e)(c)]
69.  The Commission realleges and incorporates by reference the allegations in

CASE NO. 14 COMPLAINT

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paragraphs 1 through 68.
70. Without a registration statement in effect, Defendants TrueCoin and TrustToken,
directly and indirectly, (a) made use of the means and instruments of transportation or
communications in interstate commerce or of the mails to sell securities through the use or
medium of any prospectus or otherwise; (b) carried or caused to be carried through the mails or
in interstate commerce, by any means or instruments of transportation, any such security for the
purpose of sale or for delivery after sale; and (c) made use of the means and instruments of
transportation or communication in interstate commerce or of the mails to offer to sell through
the use or medium of a prospectus or otherwise, securities as to which no registration statement
had been filed.
71. By engaging in the conduct described above, Defendants TrueCoin and
TrustToken violated, and unless restrained and enjoined will continue to violate, Sections 5(a)
and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)].
SECOND CLAIM FOR RELIEF
Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act
[15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)]
72. The Commission realleges and incorporates by reference the allegations in
paragraphs 1 through 68.
73. Defendants TrueCoin and TrustToken, in the offer or sale of securities, by the use
of means or instrumentalities of transportation or communication in interstate commerce or by
use of the mails, directly or indirectly: (a) knowingly, recklessly, or negligently obtained money
or property by means of untrue statements of material fact or by omitting to state material facts
necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading; and (b) knowingly, recklessly, or negligently engaged in
transactions, practices, or courses of business which operated or would operate as a fraud or
deceit upon the purchaser.
74. By their conduct described above, Defendants TrueCoin and TrustToken violated,
and unless restrained and enjoined will continue to violate, Securities Act Sections 17(a)(2) and

CASE NO. 15 COMPLAINT

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17(a)(3) [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)].

PRAYER FOR RELIEF
WHEREFORE, the Commission requests that this Court enter a Final Judgment:
I.
Finding that Defendants TrueCoin and TrustToken committed the violations alleged in
this Complaint;
II.
In a form consistent with Federal Rule of Civil Procedure 65(d), permanently restraining
and enjoining Defendants TrueCoin and TrustToken from, directly or indirectly, including, but
not limited to, through any entity owned or controlled by the Defendants, violating Sections 5(a)
and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] and Sections 17(a)(2) and
17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)];
II  I.
 Ordering Defendant TrueCoin to disgorge, with prejudgment interest, all ill-gotten gains
it derived from the activities set forth in this Complaint, pursuant to Sections 21(d)(5) and (7) of
the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d)(5) and (7)];
IV.
Ordering Defendants TrueCoin and TrustToken to pay civil money penalties pursuant to
Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)];
V.
Imposing a conduct-based injunction pursuant to Section 20(b) of the Securities Act, 15
U.S.C. § 77t(b), and  Section 21(d)(5) of the Exchange Act, 15 U.S.C. § 78u(d)(5), permanently
enjoining Defendants TrueCoin and TrustToken from, directly or indirectly, including, but not
limited to, through any entity owned or controlled by the Defendants, participating in the
issuance, purchase, offer, or sale of any securities;

CASE NO. 16 COMPLAINT

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VI.
Retaining jurisdiction of this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure to implement and carry out the terms of all orders and decrees
that may be entered, or to entertain any suitable application or motion for additional relief within
the jurisdiction of this Court; and
VII.
 Granting such other relief as this Court may deem just and appropriate.

Dated: September 24, 2024      Respectfully submitted,

      ___/s/ Michael J. Friedman_________________
      MICHAEL J. FRIEDMAN
      Attorney for Plaintiff
      SECURITIES AND EXCHANGE COMMISSION

CASE NO.  1 COMPLAINT
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JORGE G. TENREIRO (N.Y. Bar No. 4466991) 
   [email protected] 
JAMES P. CONNOR (D.C. Bar No. 981864) 
   [email protected] 
MICHAEL J. FRIEDMAN (N.Y. Bar No. 4297461) 
   [email protected] 
100 F Street, N.E. 
Washington, D.C. 20549 
Telephone: (202) 551-7977 
 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

SECURITIES AND EXCHANGE 
COMMISSION, 
 
  Plaintiff, 
 
 v. 

TRUECOIN LLC and TRUSTTOKEN, INC. 
 
  Defendants. 
 

  
 
Case No. C- 
 
 
COMPLAINT 

  

Plaintiff Securities and Exchange Commission (the “SEC” or the “Commission”) alleges:   

SUMMARY 

1. From November 2020 through at least April 2023 (the “Relevant Period”), 

defendants TrueCoin LLC (“TrueCoin”) and TrustToken, Inc. (“TrustToken”) (collectively 

“Defendants”) illegally offered and sold securities without registering those offerings with the 

SEC, as required by federal law.  These securities were investment contracts involving crypto 

assets called TrueUSD (“TUSD”) and profit-making opportunities with respect to TUSD on 

“TrueFi,” a so-called lending protocol from which Defendants stated investors could earn 

interest by loaning TUSD.   

2. Defendants also defrauded investors by, among other things, falsely claiming that 

TUSD was backed “1:1” by U.S. dollars.  In reality, based on a recommendation from their 

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investment adviser, and in order to earn a return for themselves from the proceeds of TUSD 

sales, Defendants had invested a substantial portion of the assets purportedly backing TUSD (the 

“TUSD reserves”) in a speculative and risky offshore commodity fund (“Commodity Fund”), 

which purportedly invested in trade finance and other related financing ventures.   

3. In December 2020, TrueCoin sold the TUSD operations to an unaffiliated 

offshore entity (“Offshore TUSD Entity”), but TrueCoin remained heavily involved in the TUSD 

operations until at least July 2023.  During that time, the Offshore TUSD Entity and TrueCoin 

significantly increased the amount of TUSD reserves invested in the increasingly risky 

Commodity Fund, but the Defendants continued to mislead investors into thinking it was safe to 

invest in the investment contracts by falsely and publicly claiming that TUSD was backed one-

for-one by U.S. dollars.   

4. In furtherance of the fraud, Defendants included links on the TrustToken website 

(trusttoken.com) to the Offshore TUSD Entity’s accountants’ “attestation reports,” which 

included reports that misleadingly indicated that the TUSD reserves exceeded the amount of 

TUSD outstanding, without disclosing the increasingly risky nature of investing the assets 

backing TUSD in the Commodity Fund. 

5. By the fall of 2022, TrueCoin and TrustToken became aware of redemption 

problems at the Commodity Fund—imperiling redemptions of the TUSD reserves and calling 

into question whether the Commodity Fund investment was impaired—yet TrueCoin and 

TrustToken continued to make false statements casting TUSD as backed dollar-for-dollar while 

making material misstatements omitting material information regarding the redemption issues at 

the Commodity Fund.   

6. TrueCoin and TrustToken terminated their relationship with the Offshore TUSD 

Entity in July 2023, but the Offshore TUSD Entity continues to offer TUSD to the public.  After 

July 2023, when Defendants were no longer involved in the TUSD operations, there were a 

number of large redemptions of TUSD.  By September 2024, more than 99% of the assets 

backing TUSD were invested in the risky Commodity Fund, such that TUSD is not backed “1:1” 

by U.S. dollars.   

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VIOLATIONS 

7. By engaging in the conduct set forth in this Complaint, Defendants engaged in the 

unlawful offer and sale of securities in violation of Sections 5(a) and 5(c) of the Securities Act of 

1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and 77e(c)]. 

8. The Defendants’ conduct also violated certain antifraud provisions of the federal 

securities laws: Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(2) and 

77q(a)(3)]. 

9. Unless Defendants are permanently restrained and enjoined, they will continue to 

engage in the acts, practices, and courses of business set forth in this Complaint and in acts, 

practices, and courses of business of similar type and object. 

JURISDICTION, VENUE, AND INTRADISTRICT ASSIGMENT 

10. The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. 

§ 1331 and Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)]. 

11. The Defendants, directly or indirectly, made use of the means or instrumentalities 

of transportation or communication in interstate commerce or of the mails in connection with the 

transactions, acts, practices, and courses of business alleged herein. 

12. Venue in this District is proper pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)] because the Defendants were located in and transacted business within this 

District, and because acts, practices and transactions constituting the violations of law alleged in 

this Complaint occurred within the Northern District of California.  

13. Under Civil Local Rule 3-2, this civil action should be assigned to the San 

Francisco Division because a substantial part of the events or omissions giving rise to the claims 

occurred in San Mateo County, where the Defendants operated their principal place of business. 

DEFENDANTS 

14. TrueCoin is a Delaware limited liability company with a principal place of 

business in Burlingame, California.  TrueCoin has not filed any registration statements with the 

Commission. 

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15. TrustToken is a Delaware corporation with a principal place of business in 

Burlingame, California.  TrustToken has not filed any registration statements with the 

Commission. 

STATUTORY AND REGULATORY FRAMEWORK 

16. The Securities Act sets forth a regime of full and fair disclosure, in contrast to 

traditional commercial principles of caveat emptor.  Congress mandated that persons who offer 

and sell securities to the investing public provide sufficient, accurate information to allow 

investors to make informed decisions before they invest.  

17. The definition of a “security” under federal securities laws includes a wide range 

of investment vehicles, including “investment contract[s].”  15 U.S.C. § 77b(a)(1).  An 

investment contract exists when there is the investment of money in a common enterprise with a 

reasonable expectation of profits to be derived from the efforts of others.  SEC v. W.J. Howey 

Co., 328 U.S. 293, 299 (1946).  Courts have found that novel or unique investment vehicles 

constitute investment contracts, including interests in orange groves, animal breeding programs, 

railroads, mobile phones, and enterprises that exist only on the internet, including crypto assets. 

18. Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] 

require that an issuer of securities register the offer or sale of securities with the Commission.  

Registration statements provide investors with important information about the securities, 

including the terms of the offering, and the issuer’s business operations, financial condition, 

results of operations, risk factors, and management.  The Securities Act prohibits persons from 

engaging in the unregistered offer and sale of securities in interstate commerce unless an 

exemption from registration applies. 

19. Sections 17(a)(2) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(2) and 

77q(a)(3)] prohibit fraud and misrepresentations in the offer or sale of securities in interstate 

commerce by, among other things, obtaining money or property by means of any untrue 

statement of material fact or any omission of material fact necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading; and 

engaging in transactions, practices, or courses of business which operate or would operate as a 

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fraud or deceit upon the purchaser. 

 
FACTS 

 
I. Defendants Offered and Sold TUSD Together With Profit-Making 

Opportunities on TrueFi in Unregistered Transactions. 

20. TrueCoin—the original issuer of TUSD—and TrustToken—the developer and 

operator of TrueFi—were both subsidiaries of the same parent company (“Parent Company”).  

The Defendants shared common ownership and management, and shared employees and office 

space. 

21. While TrueCoin and TrustToken were legally distinct entities, they disregarded 

corporate formalities and during the Relevant Period acted together to offer and sell investment 

contracts to investors by promoting TUSD and investors’ potential to profit from their purchase 

of TUSD by lending that TUSD on TrueFi to earn interest.  

22. Starting in March 2018, before the launch of TrueFi in November 2020, 

Defendants began offering the TUSD crypto asset for a price of one dollar.  TUSD was marketed 

as a so-called “stablecoin,” meaning that its price is meant to be pegged to $1.   

23. TUSD was offered and sold on an internet website maintained by Defendants in 

exchange for the transfer of money to a bank or trust account held by TrueCoin.  Shortly after the 

launch, TUSD could be traded—and was traded—on various crypto asset platforms, including 

some located in the United States. 

24. Starting in November 2020, Defendants began operating TrueFi, a platform for 

lending crypto assets, where investors could make uncollateralized loans (where the borrower 

does not put up any security such as property or other assets in exchange for the loan) of TUSD 

and other crypto assets in exchange for interest paid in the loaned crypto asset.  Investors could 

access TrueFi via the TrueFi website (truefi.io) and via an app maintained by TrustToken and 

available to U.S. persons.   

25.  In December 2020, TrueCoin sold the operations of TUSD to the unaffiliated 

Offshore TUSD Entity.  After the sale, the Offshore TUSD Entity offered TUSD directly from 

its website and TrustToken continued to do so as well, as it had before the sale.  As described in 

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a July 2023 social media post from the Parent Company announcing the final step in the transfer 

of the TUSD business to the Offshore TUSD Entity: “[The Parent Company] team has continued 

to support the TUSD business with its operations and compliance, as well as oversight of 

TUSD’s banking and fiduciary partners, following the transfer of ownership in late 2020.”   

26. In addition, TrueCoin’s ongoing involvement with TUSD operations included 

performing know-your-customer and anti-money laundering checks, maintaining a support team, 

providing blockchain support, “minting” (or creating) and redeeming TUSD, and maintaining 

audit and regulatory compliance services.   

27. TrueCoin was also at least partly responsible for the design and content of the 

TrustToken website, which included links to buy TUSD and invest in TrueFi.   

28. An officer for the Parent Company, who was also a director for TrueCoin and 

TrustToken (“Officer 1”), also represented the Offshore TUSD Entity as an authorized person 

after the sale of the TUSD business to the Offshore TUSD Entity.  Officer 1’s duties as an 

authorized person for the Offshore TUSD entity included making decisions concerning TUSD 

reserves and signing holdings reports on behalf of the Offshore TUSD Entity that were attached 

to the attestation reports—accountants’ reports purporting to provide details of where and how 

the assets backing TUSD were held, and verification that those assets exceeded the TUSD 

outstanding.  

29. TrueCoin further received from the Offshore TUSD Entity a portion of the 

interest earned on the TUSD reserves invested in the Commodity Fund through revenue sharing 

payments, as well as monetary incentives when the amount of TUSD issued (i.e., the amount of 

TUSD sold to investors) hit certain thresholds.  These revenues flowed from TrueCoin to the 

Parent Company, and TrustToken received a portion of these funds because the Parent Company 

used its revenues to fund the general operations of TrustToken and TrueCoin. 

30. TUSD purchasers who wanted to earn a yield on their TUSD could lend the 

TUSD to a TUSD pool on the TrueFi platform for the stated loan period and earn a pro rata 

return. 

31. Throughout the Relevant Period, Defendants touted TUSD together with TrueFi 

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as a way for investors to make money. 

32. For example, in a Medium post discussing the launch of TrueFi, the TrustToken 

team wrote: “At launch on November 21st, 2020, TrueFi provided for … TrueUSD lenders to 

earn attractive APY [annual percentage yield]” on TUSD loaned through the protocol. 

33. TrustToken described TrueFi profit opportunities for TUSD in a March 2021 

Medium blog post: “we are committed to further enhancing TrueFi as one of the safest protocols 

in the industry for obtaining capital-efficient loans, making it even more attractive to borrowers 

and lenders alike.”  The blog post further noted that TrueFi had serviced nearly $100 million of 

TUSD loans. 

34. The TrueFi website, which TrustToken operated, advertised an estimated APY for 

a TUSD-denominated loan on TrueFi at 21.37%.  During much of the relevant period, the 

TrustToken website (trusttoken.com), which the Defendants operated, also promoted the 

opportunity and advertised TUSD and TrueFi by stating: “Lend to earn high, stable returns on 

TUSD.”  The TrueCoin website (truecoin.com), which was available to U.S. persons, redirected 

potential investors to the TrustToken website.   

A. Investors Invested Money   

35.  During the Relevant Period, investors tendered U.S. dollars to Defendants and 

the Parent Company to purchase TUSD through publicly available websites.  From inception 

through December 2, 2020, TrueCoin minted more than 302 million TUSD in exchange for U.S. 

dollars.  Likewise, by October 2023, more than 3 billion TUSD had been minted in exchange for 

U.S. dollars, which includes TUSD purchases made through the TrustToken website.    

36. As noted, investors then loaned their TUSD on the TrueFi platform to earn the 

returns advertised by Defendants.  By the end of 2021, more than 78 million TUSD, or 

approximately 6% of the outstanding TUSD, was purportedly loaned on the TrueFi protocol.  At 

its peak, approximately 13.5% of TUSD was deployed in profit-making opportunities in the 

TUSD pool on the TrueFi platform.  

B. Investors Invested in a Common Enterprise 

37. Investors were offered an opportunity to participate in a common enterprise by 

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purchasing TUSD and earning interest on it, and those who purchased TUSD and elected to lend 

it on TrueFi did, in fact, enter in a common enterprise with other investors who so chose, and 

with Defendants. 

38. Investors’ financial fortunes were tied to the fortunes of other investors.  TUSD 

holders who sought to earn returns pooled their TUSD in TrueFi’s TUSD lending pool, and those 

assets where therein commingled and used indistinguishably to earn interest equally for all 

investors, proportional to their investments.  If the investment did well, all investors obtained 

returns equally and in proportion to their investments.  If the investments did poorly, all investors 

suffered losses equally.   

39. Investors’ fortunes were also tied to Defendants’ fortunes.  TrustToken itself 

invested directly in TrueFi’s TUSD lending pool, alongside other TUSD lending pool investors, 

to earn a pro rata return on their TUSD in the pool.  Further, the value of TrueFi’s so-called 

governance token, a crypto asset TrustToken issued and held, was linked to the success of the 

TrueFi platform—as increased use of the TrueFi platform would require increased of the TrueFi 

governance token, thereby driving up demand for the token.  Thus, if the TrueFi platform did 

well, Defendants further profited, at the same time as investors profited.    

C. Investors Reasonably Expected To Profit From Defendants’ Efforts   

40. Investors had a reasonable expectation of profits (in the form of interest earned in 

the TUSD TrueFi lending pool) from TrustToken’s managerial and entrepreneurial efforts to 

develop and operate the TrueFi platform to ensure the availability of lending opportunities to 

generate profits in the form of interest.   

41. As set forth above, Defendants made numerous statements promoting the 

opportunity for TUSD purchasers to profit on the TrueFi platform, and TrustToken did in fact 

work to ensure the success of the TrueFi platform, including by acting as an intermediary for 

TrueFi contracts and vetting and onboarding institutional customers.  TrustToken also operated 

the TrueFi website and mobile application, and frequently promoted TrueFi to the public, 

including U.S. investors.  This included: (a) onboarding potential borrowers of TUSD and other 

crypto assets; (b) maintaining the software code for TrueFi; (c) overseeing TrueFi’s 

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communication functions and governance proposals; (d) operating TrueFi social media accounts; 

and (e) helping institutional investors to interact with TrueFi.     

42. Defendants’ statements and actions, and the economic reality of the arrangements 

with respect to TUSD and TrueFi, have led investors to expect Defendants to undertake 

significant and essential technical, managerial, and entrepreneurial efforts to achieve profits for 

all investors. 

43. Defendants have used interstate commerce to offer and sell these investment 

opportunities by, among other things, engaging in a general solicitation through social media and 

the TrustToken website widely available to U.S. investors. 

44. Defendants have never had a registration statement filed or in effect with the SEC 

for their offers and sales of securities, and no exemption from registration applied or applies. 
 

II. Defendants Defrauded Investors By Falsely Claiming That TUSD Was “Fully 
Collateralized” and Backed “1:1” By U.S. Dollars. 

45. TrustToken and TrueCoin each made, and obtained money or property by means 

of, materially false and misleading statements to investors.   

46. Specifically, Defendants falsely stated: (1) that TUSD was backed “1:1” with U.S. 

dollars, when they knew or should have known that a substantial portion of the TUSD 

outstanding was invested in the illiquid and risky Commodity Fund; and (2) that TUSD was fully 

collateralized, when they knew or should have known that a substantial portion of the TUSD 

reserves were at risk because of redemption issues at the Commodity Fund. 

A.  Background on the Investment in the Risky Commodity Fund 

47. TrueCoin custodied the TUSD reserves—the proceeds from sales of TUSD that 

purportedly “backed” the token—with certain trust companies, including a Hong Kong trust 

(“Hong Kong Trust”), and entered into agreements with parameters for holding or investing the 

TUSD reserves, including that the “Hong Kong Trust” could engage an investment adviser to 

manage the TUSD reserves. 

48. In March 2020, the Hong Kong Trust investment adviser recommended that 

TUSD assets be invested in the Commodity Fund, to obtain a return on the capital, and TrueCoin 

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authorized the investment. 

49. The Commodity Fund purportedly invested in trade finance, structured trade, 

export finance, import finance, supply chain financing, and project financing of entities.  A 

private placement memorandum for a share class of the Commodity Fund in which the TUSD 

reserve funds were invested stated: “[s]hares of the Fund are speculative and involve risks 

suitable only for financially sophisticated investors who are able to bear the risk of losing most 

or all of their investment.” 

50. The Commodity Fund was not a highly liquid investment because it would only 

aim to honor redemption requests on a quarterly basis, meaning that an investor in the 

Commodity Fund may have needed to wait months to redeem shares for money, such as U.S. 

dollars.   

51. Defendants did not disclose to the public the investment of the assets backing 

TUSD in the Commodity Fund.  Instead, as described below, Defendants falsely stated to the 

public that the assets backing TUSD included U.S. dollars and cash equivalents including highly 

liquid investments that could be readily converted to known amounts of cash. 

52. After the Offshore TUSD Entity purchased the TUSD operations in December 

2020, the Offshore TUSD Entity, with the knowledge and involvement of Officer 1, invested 

increasingly more of the TUSD reserves in the Commodity Fund.  By approximately March 

2022, for example, the Offshore TUSD Entity had invested $565 million of the TUSD reserves 

in the Commodity Fund, representing approximately 37% of the face amount of the TUSD 

tokens outstanding. 
 

B. The Materially False and Misleading Statements and Other Fraudulent 
Conduct 

53. As noted, TrueCoin, TrustToken, and their agents marketed their investment 

opportunity as safe and trustworthy, in part by marketing that TUSD would retain a value of one 

dollar and, more importantly, according to Defendants and their agents (including the 

TrustToken website in February 2021 and on other dates), remain “fully collateralized.”   

54. TrueCoin retained accounting firms to provide “real-time” attestation services for 

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the TUSD reserves.  As part of these services, the accounting firms generated “attestation 

reports,” which included “holdings reports” purporting to show an up-to-date snapshot of the 

TUSD reserves and TUSD outstanding.  These reports allowed the public to compare the number 

of TUSD sold with the amount of U.S. dollar assets backing TUSD, in order to demonstrate that 

TUSD was purportedly fully backed by dollars or by highly liquid investments that could readily 

be converted to dollars.  

55. TrustToken and the Offshore TUSD Entity provided links on their websites to 

download the attestation reports and holdings reports. 

56. Potential purchasers were falsely assured by these reports that the TUSD reserves 

exceeded the TUSD outstanding.  It was undisclosed in the holdings reports that a significant 

portion of the TUSD reserves were invested in the risky Commodity Fund, which the attestation 

reports were valuing at cost without considering any adjustments. 

57. The then-TrustToken CEO, who was also a TrueCoin director (“Officer 2”), 

signed holdings reports on behalf of TrueCoin that were included in certain of these attestation 

reports, including one on December 2, 2020, representing that the amount of “US Dollars held in 

Trust Account(s)” was approximately $332.5 million, whereas the amount of TUSD then issued 

and backed was approximately $302.1 million.  In other words, the report represented that TUSD 

was over-collateralized and fully-backed by U.S. dollars—indicating, among other things, that 

TUSD holders could redeem their TUSD back to U.S. dollars readily and reliably. 

58. The Commodity Fund investment at that time was not disclosed in that holdings 

report, but a footnote to that report stated that “[t]he USD balance includes USD cash and cash 

equivalents that include short-term, highly liquid investments of sufficient credit quality that are 

readily convertible to known amounts of cash.”  

59. As Defendants knew or should have known, this statement was false, because the 

Commodity Fund was not readily convertible to cash and was not a “cash equivalent” nor highly 

liquid, since, among other reasons, redemptions could take up to 90 days.   

60. Reasonable investors, including before investing in Defendants’ securities, would 

have wanted to know that TUSD reserves were not, in fact, invested in “highly liquid 

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CASE NO. 12 COMPLAINT    
    

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investments of sufficient credit quality that are readily convertible to known amounts of cash,” 

and would have wanted to know that TUSD reserves were actually invested in the risky 

Commodity Fund. 

61. Defendants nevertheless made additional materially false and misleading 

statements in connection with their offer and sale of their securities. 

62. In the March 2021 Medium blog post, for example, TrustToken falsely claimed 

that the TrueFi platform included a feature that enabled “decentralized finance” applications “to 

automatically verify on-chain that each TUSD stablecoin is backed 1:1 with US dollars held in 

reserve,” even though at the time certain of the TUSD reserves were already invested in the risky 

Commodity Fund.  Again, TrustToken knew or should have known that its statements about the 

assets backing TUSD were false.  Reasonable investors would have wanted to know that TUSD 

was not, in fact, backed 1:1 with U.S. dollars because TUSD reserves were invested in the risky 

Commodity Fund. 

63. Similarly, in a June 3, 2022, interview posted on YouTube, when at least $565 

million of the TUSD reserves had been invested in the Commodity Fund, Officer 2 stated: “you 

hold one TrueUSD, it’s backed by one actual U.S. dollar.”  Defendants knew or should have 

known that these statements were false, because they knew or should have known the amount of 

TUSD reserves invested in the Commodity Fund at that point.  Reasonable investors would have 

wanted to know that TUSD was not, in fact, “backed by one actual U.S. dollar” because TUSD 

reserves were invested in the risky Commodity Fund. 

64. On August 31, 2022, the Offshore TUSD Entity sought to redeem the maximum 

amount of the TUSD reserves invested in the Commodity Fund because the Offshore TUSD 

Entity had concluded that it should “exit from [Commodity Fund] exposure, which is not 

conducive to our liquidity and risk control requirements for TUSD.”  Officer 1 was copied on the 

redemption request. 

65. By October 2022, the Commodity Fund had failed to timely honor redemption 

requests for the TUSD reserves invested in the fund, despite repeated requests from Officer 1 and 

the Offshore TUSD Entity.  By March 3, 2023, Officer 1 complained to an investment adviser 

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with the Hong Kong Trust: “At this stage we should have received nearly another 150m as per 

the original discussion from last year,” and “this is not a little longer than the 90 days you 

promised me which is so disappointing.” 

66. Despite the increasingly dire situation of the Defendants’ investment in the 

Commodity Fund, which Defendants knew or should have known, later holdings reports attached 

to the TUSD attestation reports continued to mischaracterize the Commodity Funds investment 

as “short-term, highly liquid investments of sufficient credit quality that are readily convertible 

to known amounts of cash,” when individuals at TrustToken and TrueCoin knew or should have 

known that (i) the Commodity Fund investment was not highly liquid, and (ii) by the fall of 

2022, due to liquidity issues with the Commodity Fund and delays with redemption requests, the 

Commodity Fund investment was not readily convertible to known amounts of cash. 

67. For example, a March 27, 2023, attestation report, which included a holdings 

report signed by Officer 1, stated: “[t]he USD balance … includes USD cash, cash equivalents 

and short-term, highly liquid investments of sufficient credit quality that are readily convertible 

to known amounts of cash,” and investments in other instruments to generate yield.  As 

Defendants knew or should have known, this statement was false and misleading.  Indeed, 

Officer 1 and the Defendants were aware of the liquidity issues and problems with redemptions 

at the Commodity Fund, which represented approximately 24% of the TUSD reserves at that 

time.  Reasonable investors would have wanted to know that TUSD reserves were invested in the 

risky Commodity Fund and its ongoing liquidity and redemption issues. 

68. The TrustToken website continued to falsely claim that TUSD was “100% 

collateralized” and “fully collateralized” through at least May 2023.  The Defendants knew or 

should have known that these statements were false and misleading.  Reasonable investors would 

have wanted to know that TUSD was not, in fact, “fully collateralized” because TUSD reserves 

were invested in the risky Commodity Fund. 
 

FIRST CLAIM FOR RELIEF 
Violations of Section 5(a) and 5(c) of the Securities Act 

[15 U.S. Code §§ 77e(a) and 77(e)(c)] 

69.  The Commission realleges and incorporates by reference the allegations in 

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paragraphs 1 through 68. 

70. Without a registration statement in effect, Defendants TrueCoin and TrustToken, 

directly and indirectly, (a) made use of the means and instruments of transportation or 

communications in interstate commerce or of the mails to sell securities through the use or 

medium of any prospectus or otherwise; (b) carried or caused to be carried through the mails or 

in interstate commerce, by any means or instruments of transportation, any such security for the 

purpose of sale or for delivery after sale; and (c) made use of the means and instruments of 

transportation or communication in interstate commerce or of the mails to offer to sell through 

the use or medium of a prospectus or otherwise, securities as to which no registration statement 

had been filed. 

71. By engaging in the conduct described above, Defendants TrueCoin and 

TrustToken violated, and unless restrained and enjoined will continue to violate, Sections 5(a) 

and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)]. 

SECOND CLAIM FOR RELIEF 
Violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act 

[15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)] 

72. The Commission realleges and incorporates by reference the allegations in 

paragraphs 1 through 68. 

73. Defendants TrueCoin and TrustToken, in the offer or sale of securities, by the use 

of means or instrumentalities of transportation or communication in interstate commerce or by 

use of the mails, directly or indirectly: (a) knowingly, recklessly, or negligently obtained money 

or property by means of untrue statements of material fact or by omitting to state material facts 

necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading; and (b) knowingly, recklessly, or negligently engaged in 

transactions, practices, or courses of business which operated or would operate as a fraud or 

deceit upon the purchaser. 

74. By their conduct described above, Defendants TrueCoin and TrustToken violated, 

and unless restrained and enjoined will continue to violate, Securities Act Sections 17(a)(2) and 

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17(a)(3) [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)]. 
 

PRAYER FOR RELIEF 

WHEREFORE, the Commission requests that this Court enter a Final Judgment: 

I. 

Finding that Defendants TrueCoin and TrustToken committed the violations alleged in 

this Complaint; 

II. 

In a form consistent with Federal Rule of Civil Procedure 65(d), permanently restraining 

and enjoining Defendants TrueCoin and TrustToken from, directly or indirectly, including, but 

not limited to, through any entity owned or controlled by the Defendants, violating Sections 5(a) 

and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a) and 77e(c)] and Sections 17(a)(2) and 

17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(2) and 77q(a)(3)]; 

III. 

 Ordering Defendant TrueCoin to disgorge, with prejudgment interest, all ill-gotten gains 

it derived from the activities set forth in this Complaint, pursuant to Sections 21(d)(5) and (7) of 

the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78u(d)(5) and (7)];  

IV. 

Ordering Defendants TrueCoin and TrustToken to pay civil money penalties pursuant to 

Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)];  

V. 

Imposing a conduct-based injunction pursuant to Section 20(b) of the Securities Act, 15 

U.S.C. § 77t(b), and  Section 21(d)(5) of the Exchange Act, 15 U.S.C. § 78u(d)(5), permanently 

enjoining Defendants TrueCoin and TrustToken from, directly or indirectly, including, but not 

limited to, through any entity owned or controlled by the Defendants, participating in the 

issuance, purchase, offer, or sale of any securities; 

 

 

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VI. 

Retaining jurisdiction of this action in accordance with the principles of equity and the 

Federal Rules of Civil Procedure to implement and carry out the terms of all orders and decrees 

that may be entered, or to entertain any suitable application or motion for additional relief within 

the jurisdiction of this Court; and 

VII. 

 Granting such other relief as this Court may deem just and appropriate. 

 

Dated: September 24, 2024   Respectfully submitted, 
         
             
      ___/s/ Michael J. Friedman_________________ 
      MICHAEL J. FRIEDMAN 
      Attorney for Plaintiff 
      SECURITIES AND EXCHANGE COMMISSION  

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