Titan Global Capital Management Sued By SEC

Titan Global Capital Management Sued By SEC


Over the past couple of months, the SEC has gone all-in on crypto platforms, filing lawsuit after lawsuit to varying degrees of success.

The defendants in these lawsuits range from major league players such as Binance, Coinbase, and Gemini to small fry such as Titan, who have been accused of fudging their numbers, failing to comply with industry standards and more.

Misleading Investors

According to a press release published by the SEC, Titan Global Capital Management USA LLC engaged in misleading behavior from August 2021 to October 2022. For starters, Titan advertised a hypothetical performance of their services leading to annualized gains as high as 2,700%.

The SEC claims this figure was based on performances recorded over three weeks – which could have easily been based on pumping a single shitcoin to the moon. This misrepresentation could have easily induced less experienced traders to believe that this was a sustainable endeavor.

Furthermore, the SEC accused Titan – whose investors ranged from minor ones to Andreessen Horowitz and several celebrities – of using improper hedge clauses. Those “created the false impression that clients had waived non-waivable causes of action against Titan,” used customer signatures without their consent, and misled investors regarding the custody of their assets.

Interestingly, the improper signature charge was based on self-reported data provided to the SEC by Titan, who allegedly noticed an internal mistake and attempted to mitigate the damage done.

Titan Settles out of Court

Osman Nawaz, the SEC’s Chief of Enforcement’s Complex Financial Instruments Unit, commented on the case, warning companies with similar strategies to take the lawsuit against Titan as a warning.

“[…] 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. Titan’s advertisements and disclosures painted a misleading picture of certain of its strategies for investors. This action serves as a warning for all advisers to ensure compliance.”

In line with their previous action of self-reporting their grave error, Titan has reportedly cooperated with the SEC. Although they refused to deny or accept the allegations, the firm has nevertheless accepted to pay a civil penalty of $850k, which will be distributed to affected clients, and $192,454 in disgorgement.

A censure and a cease-and-desist order were also accepted.


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