The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Touzi Capital LLC, a crypto mining company, and its managing member Eng Taing for several violations of the securities law. The U.S. securities regulator says the defendants allegedly deceived investors and embezzled funds to the tune of $115 million.
SEC Vs. Touzi Capital and Eng Taing
In a Nov. 29 litigation release, the SEC said Taing and Touzi Capital offered investors unregistered securities 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 fund a crypto mining operation.
However, the commission explains that Touzi Capital mismanaged these funds, some of which were diverted to unrelated businesses or spent on Eng Taing’s personal expenses. At the same time, the defendants also misled investors about the profitability of the purported mining operations, which suffered from fluctuating energy costs and equipment problems.
In a separate move, Touzi Capital, led by Eng Taing, also secured an additional investment of $23 million for a debt rehabilitation business, which was also mixed with funds from various businesses.
The SEC alleges that defendants misled investors about the security of two investments that were highly volatile and illiquid, but instead described as high-yielding stable money market accounts. Furthermore, Taing and Touzi continually marketed these securities to investors, even despite apparent operational failure.
The SEC Prayer
In the formal complaint filed in the U.S. District Court for the Southern District of California, the U.S. securities regulator accuses Touzi Capital and Eng Taing of offering unregistered securities and violations of Sections 5(a) and 5(c). ) of the Securities Act of 1993. The defendants are also charged with committing securities fraud in violation of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
If convicted, the commission seeks multiple sanctions against Touzi and Taing, including a permanent injunction that will prevent the accused from engaging in similar illegal activities. Additionally, defendants may be subject to restitution when ordered to return any profits made from these deceptive investments. Other possible sanctions include civil fines and an officer and director ban against Eng Taing.
On a lighter note, the crypto market is now valued at $3.32 trillion after a slight decline of 0.43% over the past day.
Featured image from Novian & Novian, chart from Tradingview
