Do Kwon and his company Terraform Laboratories are accused of “orchestrating a multi-billion dollar crypto asset securities fraud” by US financial officials?
Last year, the Terra Luna and TerraUSD coins launched by the Singapore-based company fell abruptly.
It is estimated that the collapse cost investors more than $40 billion (£33.5 billion).
Mr. Kwon and Terraform Labs did not react promptly to a request for comment from the BBC.
Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), said in a statement,
“We allege that Terraform and Do Kwon failed to provide the public with complete, fair, and true disclosure regarding a variety of crypto asset instruments, most notably LUNA and Terra Dollar.”
“We further argue that they committed fraud by repeating false and deceptive promises in order to gain investors’ trust before inflicting catastrophic losses,” he added.
Mr. Kwon and his organization, according to the SEC, raised billions of dollars from investors by offering them “an interconnected suite of crypto asset securities,” with many of the transactions being unregistered.
In addition, the SEC stated that Mr. Kwon and Terraform frequently asserted that the tokens’ value would increase and deceived investors regarding the stability of TerraUSD.
In May of last year, however, the value of the token and the associated Luna cryptocurrency plummeted to nearly nothing.
According to blockchain analytics firm Elliptic, global investors in TerraUSD and Luna lost an estimated $42 billion.
That caused major cryptocurrencies such as Bitcoin, Ethereum, and Tether to drop off. Hence, the phrase crypto crash became popular online.
Mr. Kwon said at the time,
“I am heartbroken about the suffering my creation has caused you all.”
The SEC lawsuit, which contained further accusations, did not specify Mr. Kwon’s location.
In December, South Korean police who had issued a warrant for Mr. Kwon’s arrest reported that they believed he was in Serbia.
Mr. Kwon previously denied being in hiding but did not disclose his location.
On Twitter, he stated,
“For any government agency that has expressed an interest in communicating, we are in full cooperation and have nothing to hide.”
Mr. Kwon is charged with fraud and violations of capital markets law in his native South Korea.
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