US SEC Charges Touzi Capital with $100M Fraud and Violations

The U.S. Securities and Exchange Commission (SEC) has filed a civil complaint against Touzi Capital and its founder, Eng Taing, alleging securities violations and fraud.

The SEC accuses Touzi Capital of raising over $100 million through unregistered securities offerings, misleading over 1,200 investors about fund usage and investment stability. The firm allegedly misappropriated and commingled funds, making false claims about liquidity and profitability.

Touzi Capital, which offers investment opportunities in real estate, blockchain, and private equity, allegedly used deceptive practices to raise capital, including misleading assurances about investment stability. The SEC highlighted that funds raised were improperly managed and diverted for unrelated purposes.

Meanwhile, regulatory discussions continue, with reports suggesting that former President Donald Trump plans to shift oversight of the $3 trillion crypto market, including blockchain technology, to the Commodity Futures Trading Commission (CFTC).

Between 2021 and early 2023, Touzi Capital and its CEO, Eng Taing, raised nearly $95 million through unregistered securities offerings aimed at financing the operations of a crypto asset mining entity.

According to the U.S. SEC’s complaint, the firm claimed these funds would support a specific mining venture, but the defendants allegedly misled investors about the use of their funds. The SEC asserts that Touzi Capital improperly commingled these funds with other business operations, some of which had no connection to crypto asset mining.

The SEC also alleges that CEO Eng Taing misappropriated a portion of the raised capital for personal expenses, misleading investors about the profitability of their investments.

Touzi Capital is said to have further misled investors by comparing the investments to low-risk, high-yield money market accounts, when in reality, these investments were illiquid and highly risky. Despite the poor performance of the investments, the firm continued to solicit more capital from investors.

Additionally, Touzi Capital raised nearly $23 million for its debt rehabilitation business but allegedly combined these funds with those of its crypto mining and other unrelated businesses. This further complicated the mismanagement of investor funds and reinforced the SEC’s claims of fraud.

The SEC is seeking a range of actions, including permanent injunctions, disgorgement of ill-gotten gains with prejudice interest, and civil penalties. The Commission is also calling for an officer and director bar against Eng Taing.

As this case unfolds, attention is also on the SEC’s ongoing legal battle with Ripple, with some legal experts speculating that the SEC may soon drop its appeal in that case.