The Securities and Exchange Commission filed a lawsuit against Terraform Labs and its founder du Quan, accusing it of "orchestrating multibillion-dollar securities fraud in encrypted assets".

In an announcement on February 16th, SEC said that Prime Rights and Terraform had granted and sold a set of interrelated encrypted asset securities, many of which were carried out in the course of undocumented transactions. The agency stressed that Terraform Labs had crashed its algorithm to stabilize the currency TerraClassicU.S. (USTC) and the linked digital currency Terra Luna Classic (LUNC).

SEC also questioned mAssets and Terraform's publicly issued Mirror (MIR), the former reflecting the data encryption derivatives that announce the share prices of listed companies, and the second is enumerating the dynamic passwords of mAssets's Mirror contract.

Gamo Gensler, the SEC's current chairman, said in a statement that Kwon and Terraform were "unable to provide comprehensive, fair and truthful disclosure to the community", especially for HKUST and Len, formerly known as Terra and TerraU.S. (UST). Gensler added:

"they also accused these people of fraudulent acts based on repeated misrepresentations and false statements before causing destructive damage to investors."

SEC filed a 55-page civil complaint with the District Court of the Southern District of New York City, alleging that it violated the provisions of the registered risk control system under the Securities Act and the Exchange Act.

The SEC pointed out in the civil indictment that Terraform and Prime Minister right "sell and promote products" its guidance agreement, which was once advertised and planned to pay 20 per cent interest on USTC savings. It also accused Terraform and Quan of misleading investors about the stability of Terra's stable investments.

Related: Korean e-commerce management was tested and Luna gave shillings to the Terra laboratory

In May last year, HKUST chose to abandon its peg to the US dollar, causing its price-- and its LUNC price-- to actually plummet to zero. This led to a widespread collapse of the digital money sales market, which could be worth 40 billion dollars.

Mr Gensler praised the SEC staff for their research, adding: "the defendants are trying to block access to critical information about their business."

He added: "this case shows that some login password companies will spare no effort to avoid following the securities law."

Kwon, a Japanese, is at large at this stage. She is said to have left her residence in Singapore in some circumstances in September after a court in Seoul, South Korea, issued an arrest warrant, and is now in Portugal. It is reported that Interpol issued a bright red notice on Quan to law enforcement agencies around the world in late September.

Prime Minister Quan denied that he was avoiding the government, while Terraform claimed that Han's case was "relatively highly ideological."

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