SEC claims Touzi Capital misused $95 million from investors

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against investment firm Touzi Capital, accusing it of defrauding over 1,200 investors by misrepresenting the purpose of its crypto asset mining fund. 

According to the SEC’s statement on November 29, Touzi Capital raised nearly $95 million through securities offerings, promising investors that their funds would support crypto mining operations. 

However, the SEC alleges that these promises were false, stating that Touzi Capital “commingled investor funds” and redirected the money into unrelated ventures. 

The SEC further claims that the company misled investors regarding the risks and profitability of its crypto mining fund. 

Investors were reportedly told the fund was comparable to "high-yield money market accounts," despite the SEC describing the investments as “risky and illiquid.” 

The fund continued to accept new investors even as its operations reportedly began failing. 

The lawsuit highlights a broader issue of accountability in the crypto industry, particularly as the SEC continues to pursue cases involving misleading practices. 

For instance, a federal judge recently upheld a separate SEC lawsuit against a promoter of a fraudulent crypto mining firm accused of an $18 million scheme. 

Joe Lubin, CEO of Consensys, commented during DevCon 2024 in Thailand that ongoing legal disputes between the SEC and crypto firms could potentially ease depending on future political developments. 

“Maybe not all the cases, maybe not all elements of the case, but I have a feeling that our industry is going to save hundreds of millions of dollars going forward,” he stated.