SEC Accuses Touzi Capital of Misappropriating Over $100 Million

The US Securities and Exchange Commission (SEC) has intensified its legal actions against the crypto industry, filing charges against investment firm Touzi Capital and its founder, Eng Taing.

The SEC accuses the firm of orchestrating an over $100 million fraud scheme involving unregistered securities and misappropriated investor funds.

SEC Files Charges Against Touzi Capital for $115 Million Crypto Fraud

The SEC’s complaint, filed on November 29, claims Touzi Capital defrauded over 1,500 investors across the United States. Between 2021 and early 2023, the firm reportedly raised $95 million for crypto mining projects and $23 million for debt rehabilitation ventures.

However, the SEC alleges that the funds were misused and pooled across unrelated businesses for Taing’s personal benefit.

“The defendants commingled investor funds among its various businesses, some of which had nothing to do with crypto asset mining, misappropriated funds for Taing’s personal use, and misled investors about the profitability of the businesses’ operations,” the Commission alleged.

The SEC continued that Touzi Capital marketed its offerings as secure, high-yield investments similar to savings accounts. However, these investments were speculative and hinged on risky third-party operations.

The complaint also highlights how the firm’s claims about its Bitcoin mining business were misleading. Touzi Capital promised profitability through low-cost energy contracts and advanced mining equipment, but fluctuating energy expenses and equipment issues undermined these assertions.

“In reality, Touzi Capital’s ‘breakeven’ point for mining bitcoin was misleading, because the way this was calculated excluded known factors. Moreover, the energy costs for Touzi Capital’s crypto-asset mining businesses fluctuated greatly, and it consistently had problems with its equipment,” the SEC added.

SEC reported that Touzi Capital’s operations have reportedly collapsed, leaving investors in the dark due to Taing’s lack of communication. In response, the SEC seeks permanent injunctions, civil penalties, and the disgorgement of illicit gains. The lawsuit also includes a request to bar Taing from serving as an officer or director in any company.

This legal action adds to the SEC’s aggressive enforcement track record under Chair Gary Gensler, who is set to step down in January. In fiscal year 2024, the SEC filed 583 enforcement cases, collecting a record $8.2 billion in penalties and remedies. High-profile crypto cases, including a $4.5 billion settlement from Terraform Labs, accounted for over half of the year’s financial recoveries.