Litigation Releases (Eng Taing and Touzi Capital, LLC)

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26182 / November 29, 2024

Securities and Exchange Commission v. Eng Taing and Touzi Capital, LLC,

No. 3:24-CV-02179 (S.D. Cal. filed Nov. 20, 2024)

SEC Charges Touzi Capital, LLC and its Managing Member for Misleading Investors and Misusing Investor Funds

The Securities and Exchange Commission filed a civil injunctive action against Touzi Capital, LLC and Eng Taing, its managing member, for allegedly defrauding more than a thousand investors in unregistered securities offerings that raised more than $100 million. The SEC's complaint 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 of their investments and other factors material to the investments' profitability.

According to the SEC's complaint, between 2021 and early 2023, Taing and Touzi Capital conducted unregistered offerings of securities of its crypto asset mining funds, each of which was for the stated purpose of financing the operations of a particular crypto asset mining entity, raising almost $95 million from more than 1,200 investors nationwide. However, the SEC alleges that the defendants commingled investor funds among its various businesses, some of which had nothing to do with crypto asset mining, misappropriated funds for Taing's personal use, and misled investors about the profitability of the businesses' operations. Similarly, Touzi allegedly raised almost $23 million for its debt rehabilitation business but commingled some of those funds with those of its crypto asset mining businesses and other unrelated Touzi businesses. Furthermore, the SEC alleges that the defendants made materially false and/or misleading statements as to the stability of these investments - comparing them to high-yield money market accounts - when in fact they were risky and illiquid, and continued to recruit investors even after the investments began failing.

The SEC's complaint, filed in the U.S. District Court for the Southern District of California, charges Taing and Touzi Capital with violating the registration and antifraud provisions of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 thereunder of the Securities Exchange Act of 1934. The Commission seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each of the defendants, as well as an officer and director bar against Taing.

The SEC's investigation was conducted by Peter Del Greco, with the assistance of Lorraine Pearson and Nicholas Bohmann and supervised by Marc Blau. The SEC's litigation will be led by Jasmine M. Starr and supervised by Douglas Miller.