SEC Charges Touzi Capital with $100 Million Cryptocurrency Fraud

• SEC accuses Touzi Capital of $100 million fraud
• Investor funds were diverted for personal use
• Investments were promoted as stable, but were risky

The U.S. Securities and Exchange Commission (SEC) has filed a civil lawsuit against Touzi Capital and its CEO, Eng Taing, alleging an unregistered securities offering that raised more than $100 million. The SEC also accuses the company of fraud by mixing and diverting investor funds.

According to the complaint, between 2021 and early 2023, Taing and Touzi Capital conducted unregistered securities offerings through cryptocurrency mining funds, purportedly intended to finance specific mining operations. These offerings attracted nearly $95 million from more than 1.200 investors across the country. However, the SEC alleges that the funds were commingled among several Touzi Capital businesses, some unrelated to cryptocurrency mining.

Taing is also alleged to have diverted some of the funds for personal use and provided misleading information to investors about the profit margins of the operations. The SEC also alleges that Touzi Capital raised about $23 million for a debt rehabilitation deal, but the funds were then commingled with funds from other, unrelated operations.

The investments were promoted as “stable and predictable,” likening them to high-yield money market accounts, but in reality they were highly speculative and illiquid, with their profitability dependent on third-party operations. Even after the collapse of these businesses began, Touzi Capital allegedly continued to attract new investments without informing investors of the operational problems.

The SEC is seeking civil penalties, disgorgement of the ill-gotten gains with interest, and permanent injunctions against the defendants, as well as a ban on Taing from serving as an officer or director of any company. This case highlights the SEC’s continued vigilance over securities violations, including in the cryptocurrency sector.

The SEC has also recently taken action against other companies in the industry, including the $650 million fraud charge against NovaTech Ltd. and its leaders. These actions reflect the agency’s commitment to protecting investors and maintaining the integrity of financial markets.

Eng Taing, Founder and CEO of Touzi Capital, is a seasoned real estate investor with over $100 million in assets under management. With a degree in economics from the Wharton School of Business, he has also led data science and analytics teams at companies including Apple, Capital One, and ATT. Touzi Capital, founded in 2021, offers investment opportunities in blockchain, private equity, and real estate.

This case highlights the importance of due diligence by investors when considering opportunities in the cryptocurrency market, especially when faced with offerings that promise high returns with low risk. The SEC continues to monitor and take action against fraudulent practices to ensure investor protection.