The US Securities and Exchange Commission (SEC) has filed a lawsuit against Touzi Capital LLC, a crypto mining company, and its board member Eng Taing for multiple securities law violations. The US securities regulator alleges that the defendants misled investors and misappropriated funds amounting to $115 million.
SEC vs. Touzi Capital and Eng Taing
In one lawsuit release on November 29, the SEC said that Taing and Touzi Capital offered investors unregistered securities in the form of investment shares in digital asset mining 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 matters or spent on Eng Taing’s personal expenses. Meanwhile, the defendants also misled investors about the profitability of the alleged mining operations, which suffered from fluctuating energy costs and equipment problems.
In a separate move, Touzi Capital led by Eng Taing also secured another $23 million in investments for a debt restructuring company, which was similarly commingled with funds from different companies.
The SEC alleges that the defendants misled investors about the safety of both investments, which were highly volatile and illiquid but previously described as stable, high-yield money market accounts. Furthermore, Taing and Touzi continually marketed these securities to investors even in the face of apparent operational failure.
The prayer of the SEC
In the formal complaint filed in the U.S. District Court for the Southern District of California, the U.S. securities regulator charges Touzi Capital and Eng Taing for offering unregistered securities and violating Sections 5(a) and 5(c) of the Securities Act of 1993. The defendants are also charged with committing securities fraud under 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 found guilty, the commission will seek multiple sentences against Touzi and Taing, including a permanent injunction that will prevent the suspect from carrying out similar unlawful activities. In addition, the defendants may be subject to a disgorgement if they are ordered to return the profits they earned from these deceptive investments. Other possible penalties include civil fines and an officer and director bar against Eng Taing.
On a lighter note, the crypto market is now valued at $3.32 trillion, after a small decline of 0.43% in the past day.
Featured image of Novian & Novian, chart from Tradingview