SEC Crypto Litigation Releases: November 2024

In November, the SEC published just one crypto-related litigation release, alleging a $115 million securities fraud scheme against Eng Taing and his company, Touzi Capital, LLC. According to the Complaint, Taing promised investors the chance to fund cutting-edge crypto mining operations and debt rehabilitation businesses, portraying these investments as stable and highly profitable.

The following opinion editorial was written by Alex Forehand and Michael Handelsman for Kelman.Law.

SEC Targets $115M Crypto Fraud Scheme: Touzi Capital Faces Allegations of Mismanagement and Misappropriation

What investors believed were opportunities for reliable growth, however, turned out to be risky, mismanaged ventures teetering on collapse. Behind the scenes, investor funds were allegedly commingled across Touzi Capital’s various entities and misappropriated for Taing’s personal use.

To make matters worse, Taing and Touzi Capital exacerbated the damage by touting false promises of profitability and security to their investors. The debt rehabilitation offerings, marketed as high-yield investments akin to money market accounts, were instead risky bets tied to failing third-party companies. When these third parties eventually defaulted, Touzi Capital hid their delinquency and continued to solicit new investors.

Meanwhile, the mining business was depicted as a foolproof way to generate bitcoin and other crypto assets at below-market costs by using “fixed energy contracts” and state-of-the-art equipment. In reality, however, energy prices fluctuated wildly, equipment broke down regularly, and the true costs of mining were hidden from investors.

Now, as Touzi Capital continues to crumble, investors are left with nothing but silence from Taing, who reportedly still controls millions of dollars in bitcoin held in virtual wallets. The Complaint seeks permanent injunctions, hefty fines, disgorgement of ill-gotten gains, and a lifetime ban on Taing from serving as a corporate officer. Once again, the SEC is letting the industry know there is no room for deceptive behavior in the markets.

As attorneys operating exclusively in the digital asset space, we understand the importance of staying informed on the latest developments and helping clients stay compliant as cryptocurrency’s future in the United States continues to be shaped by legal developments. Whether you are an investor, entrepreneur, or business involved in cryptocurrency, our team is here to provide the legal counsel needed to maneuver this complex landscape. If you believe we can be of assistance, schedule a consultation here.

Kelman PLLC’s review of the SEC’s Crypto Litigation Releases for October 2024 can be found here.

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