Titan Global Faces SEC Charges Over Crypto Asset Disclosures, Pays $1M Without Admitting Fault

According to a recent press release, Titan Global Capital Management found itself in a battle against the US Securities and Exchange Commission (SEC). The regulatory body has announced charges against the firm, alleging misleading disclosures related to client crypto assets due to compliance failures. However, the firm agreed to a settlement exceeding $1 million.

SEC Brings First Marketing Rule Action

The US Securities and Exchange Commission has leveled charges at Titan Global Capital Management, alleging that the firm provided false disclosures due to lapses in compliance related to their client’s cryptocurrency holdings.

In response, Titan has consented to halt certain activities, accept an official reprimand, and remit a payment exceeding $1 million. This sum breaks down into an $850,000 civil fine and an additional $190,000 for prejudgment interest. Notably, a company statement highlights that Titan neither confirms nor refutes the SEC’s allegations.

The SEC said that New York’s tech finance company, Titan Global, used misleading ads with fake performance numbers and other rule breaks.

From August 2021 to October 2022, Titan promoted advanced investment strategies to everyday users via its mobile app. The SEC states that Titan falsely claimed on its website about theoretical returns, even boasting up to 2,700% yearly gains for its Titan Crypto approach.

The SEC further claims that Titan’s advertisements were false. They didn’t clarify essential details, like the fact that these high projected returns were based on the strategy’s first three weeks being extended throughout the year.

Osman Nawaz, Chief of Enforcement’s Complex Financial Instruments Unit, said, “When offering and marketing complex strategies, investment advisers must ensure the accuracy of disclosures made to existing and prospective investors. The Commission amended the marketing rule to allow for the use of hypothetical performance metrics but only if advisers comply with requirements reasonably designed to prevent fraud.”

SEC Tries To Bring Crypto Under Its Umbrella

Previously, the U.S. Securities and Exchange Commission launched legal actions against two major crypto exchanges, Binance and Coinbase for offering unregistered securities and violating AML laws.

However, in early August, Coinbase requested a judge to throw out the case brought by the SEC. They argue that the regulator is overstepping its boundaries by taking legal action against the crypto platform.

The SEC seems to have an “allergy” to the crypto market, often delaying the approval of spot Bitcoin ETF applications. An ex-SEC attorney has voiced doubts about such approvals ever happening. However, Cathie Wood, CEO of ARK Invest, believes the SEC might green-light multiple ETF applications all at once.