The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Touzi Capital LLC and its managing director, Eng Taing. The court filing alleged that they misled investors about a cryptocurrency mining fund. Filed on November 29 in the U.S. District Court for the Central District of California, the SEC claims the defendants raised about $95 million from over 1,200 unsuspecting victims.
According to the complaint, Touzi Capital marketed its “Crypto Asset Mining Fund” (CAM Fund) as a low-risk, high-reward investment opportunity in cryptocurrency mining operations. The SEC alleges the company falsely represented its mining profits and misused investor funds.
Misrepresentation and Misuse of Funds
The SEC accuses Taing and Touzi Capital of issuing misleading statements about the CAM Fund’s profitability and operations. Promotional materials allegedly claimed the fund had generated substantial returns from mining Bitcoin and other cryptocurrencies. However, the SEC asserts that the mining operations were far less profitable than reported, with investor payouts primarily coming from new capital raised rather than mining activities.
Furthermore, the regulator alleges that Touzi Capital misused investor funds to cover personal expenses and other unrelated business activities. Consequently, it presented false financial statements, obscuring the fund’s authentic performance.
SEC Seeks Penalties and Injunction
The SEC’s complaint seeks permanent injunctions against Touzi Capital and Taing to prevent further violations of securities laws. It also requests the return of ill-gotten gains, prejudgment interest, and civil penalties.
This lawsuit marks another step in the SEC’s ongoing crackdown on alleged fraud in the cryptocurrency space. The agency has heightened its scrutiny of crypto-related investment products, particularly those that target retail investors with promises of high returns.
Investor Protection in Focus
While Touzi Capital and Taing have not yet responded to the allegations, the case underscores the growing regulatory pressure on firms operating in the cryptocurrency industry to maintain compliance with U.S. securities laws.
Meanwhile, investors should conduct thorough due diligence before investing in crypto-oriented schemes, particularly with the increasing enforcement actions in the sector.
The SEC’s action against Touzi Capital comes amid broader concerns over fraud and mismanagement in the rapidly evolving crypto market. Regulators worldwide are not relenting as they remain committed to enforcing tighter oversight to protect investors and ensure market stability.
