SEC Sues Touzi Capital Over $115 Million Securities Fraud – Details

The US Securities and Exchange Commission (SEC) has filed a lawsuit against Touzi Capital LLC, a crypto mining company, and its managing member Eng Taing over multiple securities law violations. The US securities regulator claims the defendants allegedly deceived investors and misappropriated funds to the tune of $115 million.

SEC Vs. Touzi Capital And Eng Taing

In a litigation release on November 29, the SEC stated that Taing and Touzi Capital offered investors unregistered securities in the form of digital asset mining investment shares from 2021 to early 2023. The defendants raised approximately $95 million from over 1,200 investors by promoting these securities as an opportunity to fund a crypto-mining operation. 

However, the commission explains that Touzi Capital mismanaged these funds, some of which were diverted into unrelated business or spent on personal expenses of Eng Taing. Meanwhile, the defendants also misled investors on the profitability status of the supposed mining operations, which suffered from fluctuating energy costs and equipment issues. 

In a separate move, Touzi Capital under the leadership of Eng Taing also secured another $23 million investment for a debt rehabilitation business which was similarly commingled with funds from various businesses. 

The SEC alleges that the defendants deceived investors on the safety of both investments which were highly volatile and illiquid but rather described as stable high-yield money market accounts. In addition, Taing and Touzi continually marketed these securities to investors even despite apparent operational failure.

The SEC’s Prayer 

In the official complaint submitted at the US District Court for the Southern District of California, the US Securities regulator is charging Touzi Capital and Eng Taing for offering unregistered securities and violations of Sections 5(a) and 5(c) of the Securities Act of 1993.  The defendants are also accused of perpetrating securities fraud as against Section 17 (a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. 

If found guilty, the commission is seeking multiple penalties against Touzi and Taing which includes a permanent injunction that will prevent the accused from engaging in similar unlawful activities. In addition, the defendants may be subject to disgorgement where they are ordered to return any profit earned via these misleading investments. Other possible penalties include civil fines and an officer and director bar against Eng Taing.

On a lighter note, the crypto market is now valued at $3.32 trillion following a minor 0.43% decline in the past day.