SEC Sues Touzi Capital in $95M Crypto Mining Fund Scandal

The U.S. Securities and Exchange Commission has filed a lawsuit against Touzi Capital, LLC and its managing member, Eng Taing, accusing the investment firm of misleading over 1,200 investors by falsely promising their funds would be used for cryptocurrency mining operations.

Taing and Touzi Capital are accused of conducting unregistered securities offerings for their crypto asset mining funds between 2021 and 2023, raising nearly $95 million from investors across the country.

The SEC complaint also claims that Touzi Capital misused investor funds for Taing’s personal expenses. Additionally, the firm allegedly raised nearly $23 million for its debt rehabilitation business but commingled those funds with those of its crypto asset mining and other unrelated ventures.

Moreover, the commission stated that Touzi Capital misrepresented the stability of the investments, falsely comparing them to high-yield money market accounts, when in fact they were “high-risk and illiquid.” Despite the deteriorating performance of the investments, the firm continued to solicit new investors.

Taing and Touzi Capital are being charged with violating the registration and antifraud provisions of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 thereunder of the Securities Exchange Act of 1934.

The Commission is requesting permanent injunctions, disgorgement with prejudgment interest, civil penalties for both Taing and Touzi Capital, and an officer and director ban against Taing.

SEC Faces Criticism

The SEC has faced increasing criticism over its regulatory approach to the cryptocurrency industry. Critics, including industry leaders and some lawmakers, claim that the SEC has focused more on enforcement actions (such as lawsuits and penalties) rather than proactively establishing clear rules for the industry.

Earlier this year, SEC Commissioner Hester Peirce, known as “Crypto Mom,” raised concerns about the Commission’s “regulation-by-enforcement” approach to cryptocurrency. Peirce believes that this approach creates uncertainty for businesses and stifles innovation.

However, the SEC may be shifting toward a more crypto-friendly regulatory approach following the resignation of its former chair, Gary Gensler, and reports that Paul Atkins is being considered as his successor.

Atkins, a former SEC commissioner known for his pro-innovation stance, is said to be a top pick by President-elect Donald Trump’s team. Referred to by some as “Crypto Dad,” Atkins has a strong understanding of the cryptocurrency sector and has advocated for more supportive policies for the industry.

Additionally, with Trump’s recent pro-crypto position, there is speculation that the regulatory oversight of cryptocurrencies could shift from the SEC to the Commodity Futures Trading Commission (CFTC).

Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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