The Securities and Exchange Commission (SEC) has filed a lawsuit against Eng Taing and the entity he controls, Touzi Capital, LLC.
This civil enforcement action concerns a $115 million securities offering fraud by Taing and Touzi Capital. When pitching these investments from 2020 to 2023, defendants led investors to believe their investment funds would either be used to finance debt rehabilitation businesses or crypto asset mining businesses that Taing managed through Touzi Capital.
Although the defendants did use investor funds to engage in these business ventures, Taing and Touzi Capital commingled investor monies, using funds intended for one Touzi Capital entity to meet the needs of another Touzi Capital entity. This commingling violated representations Defendants made to investors that their funds would be used for the specific business they had invested in.
In addition, Touzi Capital and Taing enticed investors with materially false and/or misleading statements about their business operations, claiming their debt rehabilitation offerings were stable and liquid investments similar to high-yield money market funds. In reality, these were risky, illiquid investments that entirely depended on the performance of third-party companies.
When these third-party companies defaulted on their obligations to Touzi Capital, the defendants hid this from investors for at least nine months while they continued to offer and sell securities to new and continuing investors.
Touzi Capital and Taing similarly misled investors in their crypto-asset mining business by marketing it as an investment that could profitably mine bitcoin at prices far below bitcoin’s prevailing market price. They claimed they could profitably mine through low-cost, fixed term energy contracts and by using high quality mining equipment.
In reality, Touzi Capital’s “breakeven” point for mining bitcoin was misleading, because the way this was calculated excluded known factors. Moreover, the energy costs for Touzi Capital’s crypto-asset mining businesses fluctuated greatly, and it consistently had problems with its equipment.
Touzi Capital and the businesses it oversaw now appear to have collapsed, the SEC says. Touzi Capital’s investors have not been able to get answers from the company or from Taing and, according to several investors, he has stopped communicating with them.
Taing controls all of the bank accounts of Touzi Capital and its affiliates, and additionally appears to retain control over investor assets in the form of several virtual wallets that may hold more than $14 million worth of bitcoin.
The SEC alleges that the defendants violated the registration and antifraud provisions of Sections 5 and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The SEC seeks permanent injunctions, disgorgement of ill gotten gains, along with pre-judgment interest, civil penalties against Taing and Touzi Capital, and an officer and director bar against Taing.
Eng Taing, age 39, is a resident of San Marcos, California. Taing is the sole member of Touzi Capital, LLC.
Touzi Capital, LLC, is a California limited liability company located in San Marcos, California.
The complaint was filed on November 20, 2024, at the California Southern District Court.
