US SEC Charges Touzi Capital with $100M Fraud and Violations
The U.S. Securities and Exchange Commission (SEC) is taking legal action against Touzi Capital and its founder, Eng Taing, accusing them of securities violations and fraud.
Touzi Capital allegedly raised more than $100 million through unregistered securities offerings, deceiving over 1,200 investors about how the funds would be used and the stability of their investments. The SEC claims that the company mishandled funds, making false claims about their liquidity and profitability.
Specializing in real estate, blockchain, and private equity investments, Touzi Capital allegedly used misleading tactics to attract investors. The SEC pointed out that the raised funds were not managed properly and were diverted for unrelated purposes.
There are ongoing regulatory discussions about potentially moving oversight of the $3 trillion crypto market, including blockchain technology, from the SEC to the Commodity Futures Trading Commission (CFTC).
Between 2021 and early 2023, Touzi Capital and CEO Eng Taing raised close to $95 million through unregistered securities offerings to fund a crypto asset mining operation.
According to the SEC complaint, the company promised to use these funds for a specific mining venture but allegedly misled investors about where the money was going. The SEC claims that Touzi Capital mixed these funds with other business operations unrelated to crypto asset mining.
Furthermore, CEO Eng Taing is accused of using a portion of the raised capital for personal expenses, misleading investors about the actual profitability of their investments.
Touzi Capital is said to have misled investors by comparing their investments to low-risk, high-yield money market accounts, even though the investments were highly risky and illiquid. Despite poor investment performance, the company continued to seek more capital from investors.
Additionally, Touzi Capital raised around $23 million for its debt rehabilitation business but is alleged to have combined these funds with those from its crypto mining and other unrelated ventures. This further complicated the mishandling of investor funds and reinforced the SEC’s claims of fraud.
The SEC is pursuing various actions, including permanent injunctions, returning ill-gotten gains with interest, and imposing civil penalties. They are also seeking an officer and director bar against Eng Taing.
As the case progresses, the spotlight is also on the SEC’s legal battle with Ripple, leading some legal experts to speculate that the SEC may soon abandon its appeal in that case.
