US financial regulators have charged failed South Korean cryptocurrency boss Do Kwon and his company Terraform Labs with “orchestrating a multi-billion dollar crypto asset securities fraud”.
The Singapore-based firm created the Terra Luna and TerraUSD tokens, which collapsed spectacularly last year.
The collapse is estimated to have cost investors more than $40 billion, the BB reports.
According to the SEC, 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 alleged Mr Kwon and Terraform claimed repeatedly that the tokens would increase in value, and misled investors about the stability of TerraUSD.
However, the value of the token and its linked Luna cryptocurrency plunged to close to zero in May last year.
Globally, investors in TerraUSD and Luna lost an estimated $42 billion, according to blockchain analytics firm Elliptic.
It triggered a sell-off in major cryptocurrencies such as Bitcoin, Ethereum and Tether.