- Annabelle Liang
- business reporter
US financial regulators have indicted failed South Korean cryptocurrency boss Do Kwon and his company Terraform Labs for “engaging in a multi-billion dollar cryptocurrency securities fraud.”
The Singapore-based company, which created Terra Luna and TerraUSD tokens, collapsed spectacularly last year.
The collapse is estimated to have cost investors more than $40 billion (£33.5 billion).
Kwon and Terraform Labs did not immediately respond to the BBC’s request for comment.
“They also allege they committed fraud by repeatedly making false and misleading statements to build trust before causing catastrophic losses to investors,” he added.
According to the SEC, Kwon and his company raised billions of dollars by selling “a series of interconnected cryptocurrency securities” to investors, many of which were unregistered.
The SEC also alleges that Kwon and Terraform have misled investors about the stability of TerraUSD by repeatedly claiming that the token will appreciate in value.
However, the value of the token and its linked Luna cryptocurrency plummeted to near zero last May.
TerraUSD and Luna investors lost an estimated $42 billion globally, according to blockchain analytics firm Elliptic.
Major cryptocurrencies such as Bitcoin, Ethereum, and Tether have crashed. As a result, the term Cryptocrash has become popular online.
The SEC complaint, which contains other allegations, did not list Kwon’s whereabouts.
Kwon previously denied being in hiding, but did not disclose his whereabouts.
“We are fully cooperating with government agencies that have expressed an interest in communicating with us and have nothing to hide.” he said on twitter.
Kwon faces fraud and capital market law violations in his native South Korea.