Montenegrin Prime Minister Milojko Spajić has been embroiled in controversy over his early investment in now-defunct cryptocurrency company Terraform Labs.

According to court documents filed with the U.S. Securities and Exchange Commission (SEC), Spajić played a major role in the company’s early funding, but suffered huge losses when the Terra Luna token collapsed.

Investment details and possible losses

Spajić invested $75,000 in Terraform Labs in April 2018, becoming the company's 16th investor and receiving 750,000 Luna tokens at a cost of $0.10 per token. At the peak of Luna tokens, the total value of these tokens was as high as $90 million.

SEC filings show that a total of 14 individuals and 10 companies contributed approximately $13.75 million to Terraform Labs' initial development and research.

In the spring of 2022, the value of Terra Luna tokens plummeted from a high of $119 to near zero, causing investors around the world to lose more than $40 billion. Spajić claims that his employer, not he, was defrauded of his investment. $LUNC

Meanwhile, financial experts speaking to Vijesti pointed out that if Spajić had kept the tokens at the peak of the market, he could have faced a loss of nearly $90 million.

Regulatory issues and legal disputes

Spajić failed to report his possession of Luna tokens to the Anti-Corruption Bureau, instead claiming to own €150,000 worth of Bitcoin in reports for 2020 and 2021. In subsequent reports, he listed various cryptocurrencies without specifying their value.

It is not clear whether Spajić is asking Terraform Labs and its co-founder Do Kwon to return the investment or compensate for lost profits, and whether he is suing the company and Kwon for fraud. Meanwhile, Terraform Labs and Kwon were held accountable for defrauding investors, and the SEC had reached a settlement requiring the company to pay $4.37 billion in penalties and interest, and Kwon to contribute $200 million to an investor compensation fund.

Meanwhile, Do Kwon was convicted and sentenced for using a forged passport and is currently in Montenegro awaiting extradition to the United States or South Korea. Terraform Labs has agreed to a $4.47 billion settlement with the SEC, the company will cease operations, and Kwon will be permanently banned from the crypto industry. #SEC #TerraLuna #投资亏损

Conclusion

Not only did Spajić’s investment and its consequences take a toll on him personally, it also added a new twist to Terraform Labs and Kwon’s legal dispute in Montenegro.

With the bankruptcy and liquidation of Terraform Labs, and the SEC’s massive settlement request, the incident highlights the high risks and regulatory challenges of the cryptocurrency market.

At the same time, this also reminds investors to be cautious when investing in cryptocurrencies and comply with relevant regulatory requirements.