The U.S. Securities and Substitute Commission is cracking down on Terraform Labs and its founder Create Kwon.

In a Feb. 16 announcement the SEC acknowledged it was charging Create Kwon and Terraform Labs with “orchestrating a multi-billion dollar crypto asset securities fraud” linked to its algorithmic stablecoin and various cryptocurrencies.

In a lawsuit filed within the U.S. District Court for the Southern District of Original York, the regulator has accused the agency and its founding father of violating the anti-fraud provisions of the Securities Act and the Substitute Act.

The SEC categorizes the total Terra ecosystem as one who was “neither decentralized, nor finance.” As an alternate, it was simply fraud propped up by its algorithmic stablecoin UST, acknowledged Gurbir S. Grewal, Director of the SEC’s enforcement division. He argued that the rate of UST was managed by the defendants and no longer any code.

The lawsuit alleges that Terraform Labs and Kwon marketed these resources to the public in command to produce a income, naming the 20% hobby provided for the UST stablecoin during the Anchor Protocol. The grievance states that investors were misled in regards to the soundness of UST, as a consequence of intentional deception by Kwon and Terraform Labs.

“We bid that Terraform and Create Kwon did not present the public with paunchy, ultimate, and honest disclosure as required for a host of crypto asset securities, most severely for LUNA and Terra USD,” acknowledged SEC Chair Gary Gensler in a press release.

“We moreover bid that they dedicated fraud by repeating faux and deceptive statements to produce trust earlier than inflicting devastating losses for investors,” he added.

Kwon, who is fundamental by South Korean authorities for violating the nation’s capital markets act, is believed to be in Serbia by local prosecutors, in accordance to a story from Yonhap Files. Interpol has moreover issued a crimson stay wide awake for his arrest and his passport has been nullified. South Korea’s Ministry of Justice has requested support from the Serbian authorities to detect the Terra founder.