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The United States Securities and Exchange Commission (SEC) has filed a lawsuit against Terraform Labs and its founder Do Kwon for allegedly “orchestrating a multi-billion dollar crypto asset securities fraud.”

In a Feb. 16 statement, the SEC said Kwon and Terraform offered and sold an “inter-connected suite of crypto asset securities, many in unregistered transactions.” It pointed to its now collapsed algorithmic stablecoin, TerraClassicUSD (USTC) and its connected cryptocurrency Terra Luna Classic (LUNC).

The SEC also took issue with mAssets, crypto derivatives that mirror the stock price of publicly listed companies and Terraform’s issuance of Mirror (MIR) — a governance token for the Mirror protocol which lists mAssets.

In a statement, SEC chair Gary Gensler alleged Kwon and Terraform “failed to provide the public with full, fair, and truthful disclosure” particularly for USTC and LUNC — formerly named Terra (LUNA) and TerraUSD (UST), and added:

“We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors.”

The SEC filed a 55-page complaint in the U.S. District Court for the Southern District of New York with charges relating to violations of the registration and anti-fraud provisions of the Securities Act and the Exchange Act.

In the complaint, the SEC said Terraform and Kwon “touted and marketed” its Anchor Protocol which at one point was advertised to pay out 20% interest on USTC deposits. It also alleged Terraform and Kwon misled investors about the stability of Terra’s stablecoin.

Related: Korean e-commerce exec accused of accepting LUNA for shilling Terra Labs

In May last year, USTC lost its peg to the U.S. dollar causing its price, and the price of LUNC, to effectively collapse to zero, causing a wider collapse in the digital asset market that wiped an estimated value of $40 billion.

A one-year chart of USTC’s price showing the rapid depeg event in May 2022. It currently trades for around three cents. Source: Coingecko

Gensler commended the SEC’s staff on their investigation and alleged: “The defendants attempted to prevent us from obtaining important information about their business.”

“This case demonstrates the lengths to which some crypto firms will go to avoid complying with the securities laws,” he added.

Kwon, a South-Korean national, is currently at-large and believed to be in Serbia after leaving his residence in Singapore sometime in September last year following a Seoul court issuing an arrest warrant for him. Interpol reportedly issued a Red Notice for Kwon to law enforcement worldwide later in September.

Kwon has denied he’s hiding from authorities and Terraform have claimed South Korea’s case against Kwon is “highly politicized.”

Cointelegraph contacted Terraform Labs for comment but did not receive an immediate response. Do Kwon could not be reached for comment.