Kwon founded blockchain platform Terraform Labs and was the primary developer of two crypto currencies whose demise roiled crypto markets around the world last year

The US Securities and Exchange Commission (SEC) has charged crypto developer Do Kwon and his firm Terraform Labs with deceiving investors in what the regulator considered a multibillion-dollar scheme, as per a filing in federal court.

Kwon founded blockchain platform Terraform Labs and was the primary developer of two crypto currencies whose collapse roiled crypto markets across the world in 2022.

He raised billions of dollars from investors from April 2018 by selling a series of inter-connected digital assets, many of which were unregistered securities, the Securities and Exchange Commission alleged in the court filing in the Southern District of New York.

The Securities and Exchange Commission filing did not mention where Kwon was living.

In September, a South Korean court issued an arrest warrant stating that Kwon was residing in Singapore, but the Singapore police said he was not living in the country.

TerraUSD, an algorithmic stablecoin intended to maintain a 1:1 peg to the US dollar, derived its value through another paired token called Luna.

Both tokens shed almost all their value when TerraUSD, also known as UST, dropped below its 1:1 dollar peg in May last year.

Before its collapse on May 9, TerraUSD had a market cap of over $18.5 billion and was the 10th biggest crypto currency.

As per the Securities and Exchange Commission’s filing, Terraform Labs and Kwon misled investors about UST’s stability, and claimed that the company’s crypto tokens would rise in value.

This case shows the lengths to which some crypto companies will go to avoid complying with the securities laws, but it also shows the strength and commitment of the Securities and Exchange Commission’s dedicated public servants, according to Chair Gary Gensler.

Globally, investors in TerraUSD and Luna lost an estimated $42 billion, as per blockchain analytics firm Elliptic.

The market turbulence that followed the collapse of TerraUSD resulted in the failure of a number of big crypto firms such as US crypto lender Celsius Network and Singapore-based crypto fund manager Three Arrows Capital.