Milojko Spajic, the Montenegrin Prime Minister, was an early investor in the cryptocurrency initiative Terraform Labs, which ultimately failed.
New information from an April court document indicates that Spajic invested $75,000 in Terraform Labs in April 2018, purchasing 750,000 Terra (LUNA) tokens.
Spajic’s investment took place just a few days before Terraform Labs’ official registration in Singapore on April 23, 2018, according to the court document the United States Securities and Exchange Commission (SEC) submitted.
Spajic Withdrew Investment in Terraform
The Montenegrin prime minister had disputed personal involvement in the failed crypto project, asserting that the Singaporean company Das Capital SG, for which he worked from 2017 to 2020, had invested in Terraform Labs before disclosing these court documents.
However, the SEC documents contradict this assertion, as they identify Spajic as an investor and disclose a contract dated April 17, 2018, which confirms his early involvement with the company.
The LUNA and TerraUSD (UST) crypto tokens, notoriously created by Terraform Labs, attained a market capitalization of $2 billion before collapsing in May 2022.
The collapse of Terra not only resulted in a substantial loss for the crypto ecosystem, with the market losing nearly $40 billion, but it also led to the demise of several crypto hedge funds that had provided collateral to the firm.
In a civil case the SEC brought in April 2024, a jury found Terraform Labs and co-founder Do Kwon guilty of defrauding investors.
International law enforcement agencies apprehended Kwon in March 2023, after he had been on the run for several months.
Judge Signs Off on $4.5B Terraform, Do Kwon Settlement with SEC
Terraform Labs and Kwon will be obligated to pay a staggering $4.5 billion in disgorgement and civil penalties, as U.S. District Court Judge Jed Rakoff of the Southern District of New York (SDNY) approved a settlement last week.
Furthermore, they will be permanently prohibited from participating in transactions involving “crypto asset securities,” which encompass tokens within the Terra ecosystem.
Terraform Labs contested the SEC’s initial proposals, which suggested a $5.3 billion penalty, and instead argued for a maximum sanction of $1 million. Consequently, the settlement was reached.
Ultimately, on June 6, the legal representatives of Terraform Labs and Kwon consented to the SEC’s revised settlement offer of $4.5 billion.
It is crucial to mention that Kwon, currently in detention in Montenegro awaiting a decision on his extradition, was not present at the trial in which the settlement was ultimately reached.
It is difficult for Terraform Labs, which is currently operating under Chapter 11 bankruptcy protection, to fulfill the significant financial obligations imposed by the settlement.
According to the prosecution testimony of Terraform Labs’ current CEO, Chris Amani, the company’s assets amount to approximately $150 million.
Nevertheless, the company’s ability to pay the substantial penalties imposed by the settlement remains to be determined.