The U.S. Securities and Exchange Commission (SEC) have charged crypto firm SafeMoon LLC and its U.S. affiliate, as well as its founder Kyle Nagy, chief executive officer John Karony and chief technology officer Thomas Smith over the unregistered sale of cryptoassets that promised investors high returns but resulted in massive losses.

“Instead of delivering profits, they wiped out billions in market capitalization, withdrew crypto assets worth more than US$200 million from the project, and misappropriated investor funds for personal use,” the regulator alleged.

The U.S. attorney’s office for the Eastern District of New York also filed a parallel criminal action against Karony, Nagy and Smith, charging them with conspiracy to commit securities fraud, conspiracy to commit wire fraud and conspiracy to launder money.

According to the allegations, while investors were told that their tokens were in “locked” liquidity pools that would prevent a “rug pull” fraud, the defendants allegedly retained access to the liquidity pools and used it to misappropriate millions of dollars’ worth of tokens for their own use.

They also allegedly traded tokens at the height of their value, generating millions in profits, despite telling investors that they didn’t personally hold or trade the tokens.

“The defendants masked their movement of the fraudulent proceeds via numerous private un-hosted crypto wallet addresses, complex transaction routing and pseudonymous centralized exchange accounts,” the authorities alleged.

“Decentralized finance claims to deliver transparency and predictable outcomes, but unregistered offerings lack the disclosures and accountability that the law demands, and they attract scammers like Kyle Nagy, who use these vulnerabilities to enrich themselves at the expense of others,” said David Hirsch, chief of the SEC enforcement division’s crypto assets and cyber unit, in a release.

The allegations have not been proven.

Karony and Smith have both been arrested, while Nagy remains at large.