The United States Securities and Exchange Commission (SEC) announced Tuesday that it has charged TrueCoin LLC and TrustToken Inc.—a pair of companies behind the TrueUSD (TUSD) stablecoin—with fraudulent and unregistered sales of investment contracts.

The regulator called TrueUSD a “purported stablecoin,” and charged the firms with false marketing claims related to the safety and backing of the dollar-pegged crypto asset. The companies have settled the charges without admitting or denying the allegations, and will collectively pay approximately $700,000 in penalties in the agreement.

“TrueCoin and TrustToken sought profits for themselves by exposing investors to substantial, undisclosed risks through misrepresentations about the safety of the investment,” said Jorge G. Tenreiro, Acting Chief of the SEC’s Crypto Assets & Cyber Unit, in a release. “This case is a prime example of why registration matters, as investors in these products continue to be deprived of the key information needed to make fully informed decisions.”

Editor’s note: This story is breaking and will be updated with additional information.

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