Another crypto king is on the ropes, as Terraform Labs co-founder Do Kwon has been charged with defrauding investors by the U.S. Securities and Exchange Commission. The SEC alleges that the company orchestrated a multibillion dollar “crypto asset securities fraud.” The complaint details that from April 2018 until its collapse in May 2022, Terra and Kwon raised billions of dollars from investors “offering and selling an inter-connected suite of crypto asset securities.”

According to CNBC:

Kwon and Terraform allegedly schemed from Apr. 2018 until the collapse of TerraUSD, also known as UST, and its sister coin luna in May 2022 to raise billions of dollars from investors through the offer and sale of an “inter-connected suite” of crypto asset securities, including securities-based swaps that mirrored U.S. equities, and most famously, the so-called “algorithmic stablecoin” TerraUSD. The company advertised UST as a “yield-bearing” coin, offering to pay interest of up to 20 percent, according to the complaint.

Like many stablecoins, UST was pegged at a 1-to-1 ratio with the dollar. Minting one new UST required “burning,” or destroying, one luna. This structure allowed for arbitrage opportunities that were key to maintaining the peg: Users could always swap one luna for UST and vice versa at a guaranteed price of $1, regardless of the market price of either token at the time.

But the price of luna grew unstable and forced UST to break its $1 peg, an effort which sent both terra and luna spiraling.

The complaint against Kwon and Terraform was filed in federal court for the Southern District of New York in Manhattan, and charges both with violating the registration and anti-fraud provisions of both the Securities and Exchange Acts.

While the crypto world has been balking at the suggestion that the SEC might be viewing stablecoins as securities—its latest complaint would appear to clear that up.

Kwon’s current whereabouts are unknown, but the Terra co-founder was recently believed to be in Serbia, according to South Korean intelligence. Kwon is wanted in South Korea for his involvement in the collapse of TerraUSD.