Montenegro PM falls victim to failed Terra Luna project

New court records in the US have revealed that Montenegrin Prime Minister Milojko Spajic personally invested in fugitive Do Kwon’s Terraform Labs crypto project years before the company’s collapse.

Montenegrin Prime Minister invested in Terraform Laboratories

According to Bloomberg, citing court filings, Spajic invested in Terraform Labs, the company behind the failed Terra Luna coin.

Spajic, a crypto entrepreneur in his own right, invested $75,000 in Terraform Labs in 2018 before taking over the PM office. Bought 750,000 LUNA tokens at 10 cents each.

At its peak, LUNA’s value rose to $199 per token, making Spajic’s investment potentially worth over $140 million. He probably sold some of his holdings before the crash, making a profit on his investment.

This connection raises questions about why Terraform Labs founder Do Kwon took refuge in Montenegro while trying to evade investigation. Kwon, who has been detained in Montenegro since March 2023, was caught with a fake passport and now faces extradition requests from both the United States and South Korea.

The implications of this connection are significant and further complicate the ongoing drama around Kwon and Terraform Labs.

Spajić had not previously identified himself as a victim of the LUNA crash. Previous statements have stated that rather than his personal investment being affected, he was defrauded of $75,000 by a company he was affiliated with.

While this revelation doesn’t conclusively prove any wrongdoing by Spajic, it certainly adds an intriguing dimension to the unfolding saga involving Kwon and Terraform Labs. The potential impact of the case against Kwon is not yet known. Yet this connection has important implications for the legal and financial aspects of the case.

The collapse of Terraform Labs, creator of the algorithmic UST stablecoin, caused crypto holders to lose approximately $40 billion.

In parallel, Terraform Labs and Kwon reached a settlement with the SEC for a total of $4.47 billion. As part of the agreement, the company will cease operations and Kwon will be permanently banned from the cryptocurrency industry.

Crypto bankruptcies and investor risks

In recent years, a number 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 stopped customer withdrawals just before applying, leaving many investors unable to access their funds. Similarly, Celsius Network, another cryptocurrency provider, filed for bankruptcy during the same period. Financial problems exacerbated by the collapse of TerraUSD and Luna led Celsius to suspend withdrawals from hundreds of thousands of customers in June 2022. The company has since faced fraud investigations and allegations of misuse of 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 decline. The fund’s bankruptcy resulted in significant financial losses for its investors. In November 2022, BlockFi filed for bankruptcy, citing a liquidity crisis due to a $400 million credit line from the now-bankrupt FTX exchange. But BlockFi emerged from bankruptcy in late October 2023 and is now pursuing assets it claims belong to FTX and defunct crypto hedge fund Three Arrows Capital. FTX’s collapse in November 2022 dealt a significant blow to the crypto industry. The bankruptcy proceedings of FTX, one of the largest and most well-known crypto exchanges, resulted in over $500 million in fees for its lawyers and advisors, with the total cost rising to $700 million. In February 2023, crypto mining company Core Scientific also filed for bankruptcy, struggling with falling cryptocurrency prices and rising energy costs. The company is currently reorganizing its debts and continuing restructuring activities.

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.