SEC Claims Titan Mislead Clients with Promises of 2,700% Returns

The SEC charged Titan Global Management with securities violations, alleging the firm misrepresented performance metrics. The firm agreed to a cease-and-desist order and will pay a $850,000 fine. 

In a statement released on Monday, the US Securities and Exchange Commission alleges that Titan Global Management used “hypothetical performance metrics in advertisements that were misleading.” 

Titan Accused of an Array of Transgressions

According to its statement, the SEC also charged the New-York-based Fintech firm with “multiple compliance failures that led to misleading disclosures about custody of clients’ crypto assets, the use of improper “hedge clauses” in client agreements, the unauthorized use of client signatures and the failure to adopt policies concerning crypto asset trading by employees.” 

The press release further explains the SEC’s order:

“The SEC’s order further finds that Titan (1) made conflicting disclosures to clients about how Titan custodied crypto assets; (2) included in its client advisory agreements liability disclaimer language that created the false impression that clients had waived non-waivable causes of action against Titan; and (3), contrary to representations, failed to adopt policies and procedures concerning employee personal trading in crypto assets. The order also states that Titan self-reported to the SEC staff that it failed to ensure that client signatures were obtained for certain types of transactions in client accounts and agreed to settle related charges.”

The SEC said that from August 2021 to October 2022, Titan made “misleading statements” on its website and advertised “annualized” performance results of up to 2,700% for its Titan Crypto strategy product.  

Chief of the Enforcement’s Complex Financial Instruments Unit, Osman Nawaz, 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.” 

Adding,

“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.”

Without admitting or denying the SEC’s findings, Titan agreed to a cease-and-desist order to pay a $850,000 civil penalty which will be distributed to affected customers, to pay $192,454 in disgorgement and prejudgement interest.  

The SEC hastened its crackdown on the crypto industry this year, sued Binance and Coinbase, charged 18 defendants involved in DEBT Box, charged Hex founder Richard Heart with securities violations, and warned auditing firms over misleading crypto audits. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.