Montenegrin Prime Minister Milojko Spajic personally invested in Do Kwon's Terraform Labs cryptocurrency project years before the company collapsed, new US court filings reveal.
Montenegro PM has invested in Terraform Labs
According to to Bloomberg citing the court filingsSpajic invested in Terraform Labs, the company behind the failed Terra Luna coin.
Before taking over as Prime Minister, Spajek – a cryptocurrency entrepreneur – invested $75,000 in Terraform Labs in 2018. He received 750,000 LUNA tokens at 10 cents each.
At its peak, LUNA's value rose to $199 per token, which could make Spajic's investment worth more than $140 million. He likely sold some of his holdings before the crash, capitalizing on his investment.
This connection raises questions about why Do Kwon, founder of Terraform Labs, sought refuge in Montenegro while trying to evade prosecution. Kwon, who has been detained in Montenegro since March 2023, was arrested on a false passport and now faces extradition requests 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.
Spaji has not previously confirmed that he is a victim of the LUNA crash. previously Formulations He noted that the company he was associated with had been involved in a $75,000 fraud and his personal investments were not affected.
While this revelation doesn't conclusively prove any wrongdoing on Spajic's part, it certainly adds an interesting dimension to the unfolding saga involving Kwon and Terraform Labs. The potential impact on the legal proceedings against Kwon remains to be seen. However, this connection has significant implications for the legal and financial aspects of the case.
The collapse of Terraform Labs, creator of the UST algorithmic stablecoin, resulted in cryptocurrency holders losing nearly $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 receive a permanent ban from the cryptocurrency industry.
Cryptocurrency bankruptcy 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 cryptocurrency ecosystem.
- In July 2022, Voyager Digital, a cryptocurrency lender and broker, filed for bankruptcy after 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.
- Likewise, Celsius Network, another cryptocurrency lender, filed for bankruptcy around the same time. Financial problems exacerbated by the collapse of TerraUSD and Luna 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 of customer accounts.
- Also in July 2022, Three Arrows Capital, a cryptocurrency hedge fund known for its aggressive investment strategy, also contributed to the broader market decline. The fund's bankruptcy led to significant financial losses for its investors.
- In November 2022, BlockFi filed for bankruptcy, citing a liquidity crunch related to its reliance on a $400 million line of credit from the now-bankrupt FTX exchange. However, BlockFi emerged from bankruptcy in late October 2023 and is now seeking to pursue assets it claims are owed to FTX and defunct cryptocurrency hedge fund Three Arrows Capital.
- The collapse of FTX in November 2022 dealt a heavy blow to the cryptocurrency industry. As one of the largest and most popular cryptocurrency exchanges, FTX's bankruptcy proceedings resulted in over $500 million in fees to its lawyers and advisors, with total costs rising to $700 million.
- In February 2023, cryptocurrency mining company Core Scientific also filed for bankruptcy, as it suffered from falling cryptocurrency prices and rising energy costs. The company is currently reorganizing its debts and restructuring operations.
These bankruptcy cases have highlighted the complex legal issues of the cryptocurrency industry, raising concerns about the lack of regulation, transparency, and risks faced by investors.