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Montenegrin PM Milojko Spajic’s $75K Investment in Terraform Labs Exposed by Court Documents

Last Updated June 19, 2024 2:43 PM
Teuta Franjkovic
Last Updated June 19, 2024 2:43 PM

Key Takeaways

  • Montenegrin Prime Minister Milojko Spajic invested $75,000 in Terraform Labs in April 2018, days before its official registration.
  • Terraform Labs was ordered to pay $4.5 billion in a settlement with the SEC.
  • Terraform Labs faces bankruptcy as it struggles to meet the financial obligations of the settlement with its limited assets.

Montenegrin Prime Minister Milojko Spajic was an early investor  in the failed crypto project Terraform Labs.

New findings from an April court document reveal that Spajic invested $75,000 in Terraform Labs in April 2018, purchasing 750,000 Terra (LUNA) tokens.

Spajic’s Investment in Terraform Days Before Official Registration

According to the court document filed by the United States Securities and Exchange Commission (SEC), Spajic’s investment occurred just days before Terraform Labs was officially registered in Singapore on April 23, 2018.

As per documents submitted to the New York court Spajić committed to pay exactly $75,000 in a contract with Teraform on April 17, 2018, the first day of fundraising for this project.

Milojko Spajic Terra
Credit: Sec.gov

A financial expert explained to Vijesti that Spajić thereby acquired 750,000 Luna tokens at a price of 10 cents, which was the lowest of all those paid by other investors in later phases of the project before going public. In the first phase, the investment is the riskiest, which is why the price of Luna tokens was so low.

On that and the next, 14 individuals and 10 companies paid about $13.75 million for the initial development and research of Do Kwon’s company’s crypto project, according to data from the table that SEC Assistant Chief Accountant Avron Elbaum submitted to the New York court on April 19 of this year, where Teraform and Do Kwon were tried.

Before these court documents came to light, Montenegrin Prime Minister Milojko Spajic had denied  any personal involvement with the failed crypto project Terraform Labs. He claimed that the investment had been made by Das Capital SG, a Singaporean company he worked for from 2017 to 2020.

However, documents from the United States Securities and Exchange Commission (SEC) contradict his statement, identifying Spajic as a direct investor and disclosing a contract dated April 17, 2018, which confirms his early involvement with the company.

From $2B Market Cap to Fraud Conviction and CEO’s Capture

Terraform Labs, known for developing the infamous LUNA and TerraUSD (UST) crypto tokens, experienced a market cap of $2 billion before its dramatic collapse in May 2022.

The collapse of Terra had catastrophic effects on the crypto ecosystem, erasing nearly $40 billion from the market and leading to the downfall of several crypto hedge funds that had provided collateral to the firm.

In April 2024, Terraform Labs and its co-founder Do Kwon were found guilty of defrauding investors in a civil case brought by the SEC.

Do Kwon had been a fugitive for several months before his apprehension by international law enforcement in March 2023.

Terraform to Pay $4.5B in Landmark SEC Settlement; Bankruptcy Looms

Last week, Judge Jed Rakoff of the Southern District of New York (SDNY) approved a settlement requiring Terraform Labs and its co-founder Do Kwon to pay $4.5 billion in disgorgement and civil penalties. Additionally, they are permanently banned from engaging in transactions involving “crypto asset securities,” which include tokens within the Terra ecosystem.

This settlement was reached after the SEC initially proposed a penalty of $5.3 billion, which Terraform Labs contested, advocating for a maximum fine of $1 million. However, on June 6, legal representatives for Kwon and Terraform Labs accepted the SEC’s revised settlement offer of $4.5 billion.

It is important to note that Kwon, who is currently detained in Montenegro awaiting an extradition decision, did not attend the trial where the settlement was finalized.

Currently under Chapter 11 bankruptcy protection, Terraform Labs faces the significant challenge of meeting the financial demands of the settlement. According to testimony by the company’s current CEO, Chris Amani, Terraform Labs holds about $150 million in assets, raising uncertainties about how the company will manage to fulfill the substantial fines imposed by the settlement.

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