SEC v. Eng Taing, Touzi Capital, LLC — U.S. Securities and Exchange Commission Litigation Release No. 26182, dated November 29, 2024.
The SEC charged Touzi Capital, LLC and its managing member, Eng Taing, for defrauding over a thousand investors in unregistered securities offerings that raised more than $100 million. They allegedly misled investors about fund usage, commingled and misappropriated funds, and made false claims about investment stability and profitability.
In Plain English
Imagine you gave money to a company to invest in two different projects: one for making digital money (like Bitcoin) and another for helping people pay off debts. The company promised your money would only go to the project you chose. However, the company mixed all the money together, used some for personal expenses, and lied about how safe and profitable the investments were, even comparing them to safe savings accounts when they were actually very risky. Eventually, the company collapsed, and investors lost their money.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Fundraising for Crypto Mining Between 2021 and early 2023, Touzi Capital, LLC and its managing member, Eng Taing, raised nearly $95 million from over 1,200 investors nationwide. These funds were purportedly for unregistered securities offerings to finance specific crypto asset mining entities.
- Misleading Crypto Promises Defendants allegedly marketed their crypto-asset mining business by claiming it could profitably mine bitcoin at prices far below market rates, due to low-cost energy contracts and high-quality equipment. However, their 'breakeven' calculations excluded known factors, and they faced fluctuating energy costs and equipment problems.
- Fundraising for Debt Rehabilitation Separately, Touzi Capital allegedly raised nearly $23 million for its debt rehabilitation business. Investors were led to believe these funds would be used specifically for this purpose.
- False Claims on Debt Business Defendants falsely represented the debt rehabilitation offerings as stable and liquid investments, comparable to high-yield money market funds. In reality, these investments were risky and illiquid, dependent on third-party companies.
- Commingling of Funds Despite promises that investor funds would be used for specific businesses, Taing and Touzi Capital commingled investor monies. Funds intended for one Touzi Capital entity were used to meet the needs of another, including businesses unrelated to crypto asset mining or debt rehabilitation.
- Misappropriation of Funds In addition to commingling, the SEC alleges that defendants misappropriated investor funds for Eng Taing’s personal use.
- Hiding Investment Failures When the third-party companies in the debt rehabilitation business defaulted, Defendants allegedly hid this information from investors for at least nine months. During this period, they continued to solicit new and existing investors.
- Continued Recruitment Amidst Collapse Defendants continued to recruit investors even after the investments began failing, making materially false and/or misleading statements about their stability and profitability.
- Collapse and Lack of Communication Touzi Capital and the businesses it oversaw have reportedly collapsed. Investors have been unable to get answers from the company or Taing, and he has allegedly stopped communicating with them.
- Control of Assets Eng Taing allegedly controls all bank accounts of Touzi Capital and its affiliates. He also appears to retain control over investor assets held in virtual wallets, potentially valued at over $14 million in bitcoin.
The Enforcement Action
The SEC filed a civil injunctive action against Touzi Capital, LLC and its managing member, Eng Taing, for defrauding over a thousand investors in unregistered securities offerings that raised more than $100 million. The SEC alleges that the defendants misled investors about the use of investor proceeds by commingling and misappropriating investor funds, and raised capital through false and misleading statements about the liquidity and profitability of their investments. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each defendant, as well as an officer and director bar against Taing.
Named in this action: Eng Taing, Touzi Capital, LLC.