The U.S. Securities and Exchange Commission (SEC) has charged Do Kwon and his former %Cryptocurrency firm %TerraformLabs with orchestrating a multi-billion-dollar fraud.
The Singapore-based firm created the Terra Luna and %TerraUSD tokens, both of which collapsed last year at an estimated cost to investors of more than $40 billion U.S.
“We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for Luna and TerraUSD,” the SEC said in a written statement.
According to the SEC charges, Mr. Kwon and his company raised billions of dollars from investors by selling them “an interconnected suite of crypto asset securities” with many transactions being unregistered.
The SEC also alleges that Mr. Kwon and Terraform Labs claimed that the tokens would rise in value, and misled investors about the risks involved and the stability of TerraUSD.
The value of TerraUSD and its linked Luna cryptocurrency plunged to near zero last May.
Globally, investors in TerraUSD and Luna lost an estimated $42 billion U.S., according to blockchain analytics firm Elliptic.
Mr. Kwon is currently on the run and his exact location is not known. In December, South Korean police, who have an arrest warrant for Mr. Kwon, said they believed he is living in Serbia.
Mr. Kwon also faces charges of fraud and securities violations in his home country of South Korea.