In a shocking revelation, Montenegrin Prime Minister Milojko Spajic was found to have been an early investor in the failed crypto project Terraform Labs. The discovery, made through an April court document, reveals that Spajic invested $75,000 in Terraform Labs in April 2018, purchasing 750,000 Terra (LUNA) tokens just days before the company was officially registered in Singapore.

A Web of Lies

Prior to the disclosure of these court documents, Spajic had denied personal involvement in the failed crypto project, claiming that it was the Singaporean company Das Capital SG, for which he worked from 2017 to 2020, that had invested in Terraform Labs. However, the SEC documents contradict this, listing Spajic as an investor and revealing a contract dated April 17, 2018, establishing his early involvement with the company.

The Rise and Fall of Terraform Labs

Terraform Labs was responsible for the creation of the infamous LUNA and TerraUSD (UST) crypto tokens, which at one point reached a market cap of $2 billion before collapsing in May 2022. The collapse of Terra not only caused a significant loss in the crypto ecosystem, wiping out nearly $40 billion from the market, but also led to the downfall of several crypto hedge funds that had provided collateral to the firm.

The SEC's Pursuit of Justice

In April 2024, a jury found Terraform Labs and co-founder Do Kwon guilty of defrauding investors in a civil case brought by the SEC. Kwon had been on the run for several months before being apprehended by international law enforcement agencies in March 2023. Last week, U.S. District Court Judge Jed Rakoff of the Southern District of New York (SDNY) approved a settlement that will require Terraform Labs and Kwon to pay a staggering $4.5 billion in disgorgement and civil penalties.

The Road Ahead

The settlement comes after initial proposals from the SEC suggested a $5.3 billion penalty, which Terraform Labs contested by advocating for a maximum fine of $1 million. Ultimately, on June 6, the legal representatives for both Kwon and Terraform Labs agreed to the SEC’s revised settlement offer of $4.5 billion. It is important to note that Kwon, who is currently in custody in Montenegro awaiting a decision on his extradition, did not attend the trial where the settlement was reached. Terraform Labs, currently operating under Chapter 11 bankruptcy protection, faces the challenge of how to fulfill the substantial financial obligations imposed by the settlement.