A multi-billion dollar crypto asset securities fraud was allegedly orchestrated by failed South Korean cryptocurrency executive Do Kwon and his company Terrraform Labs, according to US financial regulators.
The Terra Luna and TerraUSD tokens were developed by the Singapore-based company and spectacularly crashed last year.
Investors may have lost more than $40 billion (£33.15 billion) as a result of the collapse.
Following a request for comment from the BBC, Mr. Kwon and Terraform Labs did not immediately respond.
"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 Terra USD," said Gary Gensler, chairman of the US Securities and Exchange Commission (SEC).
In order to gain trust before inflicting irreparable losses on investors, they allegedly repeated false and misleading statements, according to the lawsuit.
The Securities and Exchange Commission (SEC) claims that Mr. Kwon and his business raised billions of dollars from investors by offering them "an interconnected suite of crypto asset securities," many of which were done without being registered.
Additionally, the SEC charged that Mr. Kwon and Terraform repeatedly asserted that the tokens would appreciate in value and misled investors regarding the stability of TerraUSD.
However, in May of last year, the value of the token and the Luna cryptocurrency it was linked to fell almost to zero.
Elliptic, a blockchain analytics company, estimates that investors in TerraUSD and Luna lost $42 billion worldwide.
It caused major cryptocurrencies like Bitcoin, Ethereum, and Tether to drop in value. The term "cryptocrash" consequently became popular online.
Mr. Kwon at the time stated, "I am heartbroken about the pain my invention has caused on all of you.
The SEC complaint, which contained additional allegations, omitted Mr. Kwon's location.
The South Korean government, which has a warrant out for Mr. Kwon's arrest, stated in December that they believed he was in Serbia.
When asked about his whereabouts, Mr. Kwon previously denied that he was running from the law.
He wrote on Twitter, "We are in full cooperation and we have nothing to hide for any government agency that has shown interest in communicating.
In his native South Korea, Mr. Kwon is accused of defrauding investors and breaking the law governing capital markets.
