Lawyers for the United States Securities and Exchange Commission (SEC) presented the image of Terraform Labs as a fraudulent empire in which “investors lost nearly everything” on the opening day of its civil trial.

According to a March 25 Reuters report, SEC attorney Devon Staren said in U.S. District Court for the Southern District of New York that Terra was a “house of cards” that collapsed for investors in 2022. The civil trial kicked off more than a year after SEC officials filed a lawsuit against the blockchain firm in February 2023, alleging that Terra and its co-founder Do Kwon “orchestrat[ed] a multi-billion dollar crypto asset securities fraud.”

Kwon was not present on the first day of the trial. The Terraform Labs co-founder was arrested in Montenegro in March 2023 for using falsified travel documents and sentenced to four months in prison. Though he reportedly had been released on March 23 while awaiting extradition to either the U.S. or his native South Korea, no decision had been made at the time of publication.

The SEC alleged Terra and Kwon misled investors about the stability of TerraUSD (UST), an algorithm stablecoin that depegged from the U.S. dollar. The impact on Terra (LUNA) and other tokens likely contributed to a significant crypto market downturn in 2022 in which several companies declared bankruptcy.

Related: US Supreme Court case could change crypto industry regulation

The trial was initially scheduled to begin in January. However, SEC officials joined with Kwon’s legal team to push back the start date to March in anticipation of the Terraform Labs co-founder joining in his defense in person. In December 2023, Judge Jed Rakoff granted summary judgment in favor of the SEC over Terra dealing with unregistered securities and in favor of Kwon and the platform for the offer and sale of security-based swaps.

Terraform’s trial is one of many cases in the crypto space expected in court in 2024. On March 28, former FTX CEO Sam Bankman-Fried will be sentenced following his conviction on seven felony charges. After pleading guilty to one felony charge, former Binance CEO Changpeng Zhao is expected to be sentenced on April 30.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime