The U.S. Securities and Exchange Commission (SEC) has filed a civil action against Touzi Capital, LLC, and its managing member, Eng Taing, accusing them of defrauding over a thousand investors in unregistered securities offerings. The scheme, which allegedly raised more than $100 million, involved misleading investors about how their funds would be used and making false claims about the profitability and liquidity of the investments.

According to the SEC, between 2021 and early 2023, Touzi Capital conducted unregistered securities offerings for its crypto asset mining funds, raising nearly $95 million from over 1,200 investors across the United States. These funds were ostensibly intended to support specific crypto asset mining operations. However, the SEC alleges that Touzi Capital and Taing commingled investor funds across various unrelated businesses, misappropriated funds for Taing’s personal use, and misled investors about the financial health and profitability of the investments.

The SEC’s complaint also highlights similar allegations related to Touzi’s debt rehabilitation business. The company raised approximately $23 million from investors but allegedly mixed those funds with its crypto mining business and other operations. Investors were reportedly assured their investments were as stable as high-yield money market accounts, despite the underlying businesses being high-risk and illiquid. Touzi Capital and Taing allegedly continued to recruit investors even after the ventures began to fail.

The SEC filed its complaint in the U.S. District Court for the Southern District of California, charging Taing and Touzi Capital with violating antifraud and registration provisions under the Securities Act of 1933 and the Securities Exchange Act of 1934. The Commission is seeking permanent injunctions, disgorgement of ill-gotten gains with interest, civil penalties, and a ban preventing Taing from serving as an officer or director of any company.

The investigation was led by SEC staff members Peter Del Greco, Lorraine Pearson, and Nicholas Bohmann under the supervision of Marc Blau. Litigation will be handled by Jasmine M. Starr and overseen by Douglas Miller.

This case underscores the SEC’s ongoing efforts to address fraudulent practices in unregistered securities offerings, particularly those tied to emerging sectors like crypto asset mining. Investors are advised to exercise caution and thoroughly vet investment opportunities, especially those promising high returns with low risk.