The regulatory watchdog alleges that Kwon raised funds from investors between April 2018 and 2022, by making false offerings of inter-connected digital assets, most of which were not registered.

The firm has been accused of misleading investors that believed they were investing in digital asset securities including an ‘algorithmic stablecoin’ that was meant to retain the value to the US dollar. Kwon allegedly promoted a crypto token that would be interchangeable with LUNA, a Terra security, and falsely informed investors that the value of their token would go up.

SEC chair Gary Gensler stated: "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. We also allege that they committed fraud by repeating false and misleading statements to build trust before causing devastating losses for investors."

Director of the SEC’s division of enforcement, Gurbir S. Grewal commented: "Today’s action not only holds the defendants accountable for their roles in Terra’s collapse, which devastated both retail and institutional investors and sent shock waves through the crypto markets, but once again highlights that we look to the economic realities of an offering, not the labels put on it. As alleged in our complaint, the Terraform ecosystem was neither decentralized, nor finance. It was simply a fraud propped up by a so-called ‘algorithmic stablecoin’ – the price of which was controlled by the defendants, not any code."