Fresh U.S. court filings have revealed that Montenegro Prime Minister Milojko Spajic personally invested in fugitive Do Kwon’s Terraform Labs crypto project years before the company’s collapse.
Montenegro PM invested in Terraform Labs
According to Bloomberg, citing court filings, Spajic invested in Terraform Labs, the company behind the failed Terra Luna coin.
Before assuming his PM office, Spajic — a crypto entrepreneur in his own right — invested invested $75,000 in Terraform Labs in 2018. He acquired 750,000 LUNA tokens at 10 cents each.
At its peak, LUNA’s value soared to $199 per token, potentially making Spajic’s investment worth over $140 million. He likely sold some of his holdings before the collapse, profiting from his investment.
This connection raises questions about why Do Kwon, the founder of Terraform Labs, sought refuge in Montenegro while attempting to evade prosecution. Kwon, who has been detained in Montenegro since March 2023, was apprehended with a false passport and now faces extradition demands from both the United States and South Korea.
The implications of this connection are significant, adding complexity to the ongoing drama surrounding Kwon and Terraform Labs.
Spajić has not previously asserted himself as a victim of the LUNA crash. Earlier statements indicated that a company he was associated with suffered a $75,000 fraud rather than his personal investment being affected.
While this revelation does not definitively prove any wrongdoing on Spajic’s part, it certainly adds an intriguing dimension to the unfolding saga involving Kwon and Terraform Labs. The potential impact on the legal proceedings against Kwon remains to be seen. Still, this connection has significant implications for the legal and financial aspects of the case.
The collapse of Terraform Labs, the creator of the algorithmic UST stablecoin, cause crypto holders to lose nearly $40 billion.
In parallel, Terraform Labs and Kwon have reached a settlement with the SEC totaling $4.47 billion. As part of the agreement, the company will halt its operations, and Kwon will receive a permanent ban from the cryptocurrency industry.
Crypto bankruptcies and investor risks
In recent years, a series of high-profile cryptocurrency companies have filed for bankruptcy, underscoring the volatility and legal complexities inherent in the crypto ecosystem.
- In July 2022, Voyager Digital, a crypto lender and broker, filed for bankruptcy following the collapse of the TerraUSD stablecoin and its associated cryptocurrency Luna. The company had halted customer withdrawals just before filing, leaving many investors unable to access their funds.
- Similarly, Celsius Network, another crypto lender, filed for bankruptcy around the same time. Financial troubles exacerbated by the TerraUSD and Luna collapse led Celsius to suspend withdrawals for hundreds of thousands of customers in June 2022. The company has since faced fraud investigations and allegations of mishandling customer accounts.
- Also in July 2022, Three Arrows Capital, a crypto hedge fund known for its aggressive investment strategy, also contributed to the broader market downturn. The fund’s bankruptcy led to significant financial losses for its investors.
- In November 2022, BlockFi filed for bankruptcy, citing a liquidity crisis linked to its reliance on a $400 million credit line from the now-bankrupt FTX exchange. However, BlockFi emerged from bankruptcy in late October 2023 and is now pursuing assets it claims are owed by FTX and the defunct crypto hedge fund Three Arrows Capital.
- The collapse of FTX in November 2022 dealt a significant blow to the crypto industry. As one of the largest and most well-known crypto exchanges, FTX’s bankruptcy proceedings have resulted in over $500 million in fees for its lawyers and advisers, with total costs soaring to $700 million.
- In February 2023, crypto mining company Core Scientific also filed for bankruptcy, struggling with declining cryptocurrency prices and rising energy costs. The company is currently reorganizing its debts and restructuring operations.
These bankruptcy cases have highlighted the crypto industry’s complex legal issues, raising concerns about the lack of regulation and transparency and the risks investors face.
