The United States regulator has filed a lawsuit against investment firm Touzi Capital for allegedly deceiving investors regarding the liquidity and profitability of its crypto asset mining fund.
According to a statement released by the US Securities and Exchange Commission (SEC) on November 29, Touzi Capital is accused of defrauding over 1,200 US investors through security offerings of its crypto asset mining fund, raising nearly $95 million.
The SEC claims that Touzi Capital falsely presented the investment to investors as funding for crypto mining operations. However, the investment firm allegedly mixed investor funds with its subsidiary businesses and used the money for ventures unrelated to crypto mining.
Furthermore, the SEC accuses Touzi Capital of providing misleading information about the risks and profitability of its crypto mining asset fund. The regulator alleges that the defendants made false and misleading statements, comparing the investments to high-yield money market accounts.
The SEC states that the fund was risky and illiquid, yet it continued to accept new investors even after its investments began to fail.
This action by the SEC comes after a US federal judge rejected an appeal to dismiss a SEC lawsuit against a promoter of an allegedly fraudulent crypto mining firm that conducted an $18 million scheme. The promoter argued in the appeal that the SEC had not proven that the investments were securities offerings or investment contracts.
However, Consensys CEO Joe Lubin believes that the ongoing legal battles between crypto firms and the SEC will likely diminish if Donald Trump is reelected as the 47th president of the United States. Lubin expressed his belief that the industry could potentially save hundreds of millions of dollars in the future.