SEC Charges Touzi Capital and Founder with $100 Million Crypto Fraud Scheme

The U.S. Securities and Exchange Commission (SEC) is stepping up its legal actions against the cryptocurrency industry. Recently, they filed charges against an investment firm called Touzi Capital and its founder, Eng Taing.

The SEC claims that this firm was involved in a fraud scheme that exceeded $100 million. This scheme included unregistered securities and misappropriated investor funds.

According to the SEC’s complaint, Touzi Capital defrauded over 1,500 investors across the United States. Between 2021 and early 2023, the firm raised about $95 million for crypto mining projects and another $23 million for debt rehabilitation ventures.

However, the SEC argues that these funds were misused. They say the money was pooled across unrelated businesses for Taing's personal benefit.

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

Additionally, the SEC noted that Touzi Capital marketed its offerings as secure, high-yield investments, similar to savings accounts. In reality, these investments were speculative and relied on risky third-party operations.

The complaint also points out misleading claims about the firm’s Bitcoin mining business. Touzi Capital promised profitability through low-cost energy contracts and advanced mining equipment. But fluctuating energy costs and equipment issues undermined these claims.

“In reality, Touzi Capital’s ‘breakeven’ point for mining Bitcoin was misleading. The way this was calculated excluded known factors. Moreover, energy costs for their crypto-asset mining businesses fluctuated greatly, and they consistently faced equipment problems,” the SEC added.

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

This legal action is part of the SEC’s aggressive enforcement strategy under Chair Gary Gensler. In fiscal year 2024, the SEC filed 583 enforcement cases and collected a record $8.2 billion in penalties and remedies. Notably, high-profile crypto cases, including a $4.5 billion settlement with Terraform Labs, accounted for over half of the year’s financial recoveries.