According to a Securities and Exchange Commission (SEC) complaint submitted on Thursday, TerraUSD (UST) was backed at least once in May 2021 not by its algorithm but rather by the intervention of a “third party,” which committed to buying sizable amounts of UST to restore the $1 peg.

In its official complaint, the SEC was quoted as saying:

In May 2021, when the value of UST became ‘unpegged’ from the U.S. dollar, Terraform, through Kwon, secretly discussed plans with a third party, the ‘U.S. trading firm,’ to buy large amounts of UST to restore its value.

It further alleged that when UST’s price moved back up as a result of these attempts, the defendants erroneously and misleadingly represented to the public that UST’s algorithm had effectively re-pegged UST to the dollar.