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Terraform Labs, the cryptocurrency group behind the $40bn collapse of terraUSD digital tokens in 2022, and its co-founder Do Kwon have been found liable by New York jury for defrauding investors.

The civil verdict, handed down on Friday after a nine-day trial, is a win for the US Securities and Exchange Commission, which has sought to crack down on the crypto sector.

The SEC sued the collapsed stablecoin operator and Kwon last year for allegedly raising billions of dollars from investors by selling several interlinked digital securities, many of which were not registered with regulators.

These assets included terraUSD, a stablecoin developed by Kwon whose sudden collapse in 2022 rocked the crypto industry, as well as the associated luna token, according to the SEC.

Terraform and Kwon “caused devastating losses for investors and wiped out tens of billions of market value nearly overnight”, said Gurbir Grewal, director of the SEC’s enforcement division.

Lawyers for Terraform and Kwon did immediately respond to requests for comment.