Key Points
- Touzi Capital and CEO Eng Taing allegedly defrauded over 1,200 investors through unregistered crypto mining securities offerings, raising approximately $95 million while misappropriating and commingling funds across various businesses.
- The defendants reportedly misled investors by presenting risky crypto mining investments as stable alternatives to money market accounts, continuing to recruit investors even as investments began failing.
Massive Fraud Scheme Uncovered in Crypto Mining Operations
The Securities and Exchange Commission (SEC) has filed charges against Touzi Capital, LLC and its managing member Eng Taing for orchestrating a fraudulent scheme that raised more than $100 million from investors nationwide. The civil action, filed in the U.S. District Court for the Southern District of California, alleges that between 2021 and early 2023, the defendants conducted unregistered securities offerings related to crypto asset mining funds, deceiving more than a thousand investors about the nature and stability of their investments.
Misappropriation and Misrepresentation of Funds
According to the SEC’s complaint, Taing and Touzi Capital raised approximately $95 million for crypto mining operations but allegedly diverted investor funds for unauthorized purposes, including Taing’s personal use. The company also raised an additional $23 million for a debt rehabilitation business, which was similarly mismanaged through fund commingling with crypto mining operations and other unrelated business ventures.
Regulatory Response and Legal Actions
The SEC’s charges include violations of both the Securities Act of 1933 and the Securities Exchange Act of 1934, specifically targeting registration and antifraud provisions. The Commission is pursuing significant remedial actions, including permanent injunctions, disgorgement with prejudgment interest, and civil penalties against both defendants. Additionally, the SEC is seeking an officer and director bar against Taing, which would prevent him from serving in leadership positions in public companies.
The case represents a significant enforcement action in the cryptocurrency mining sector, highlighting the SEC’s continued focus on protecting investors from fraudulent schemes in the digital asset space. The investigation was conducted by the SEC’s enforcement team, with Peter Del Greco leading the investigation and Jasmine M. Starr heading the litigation efforts.
