How did Do Kwon disrupt the political situation in Montenegro?

Author: Andrew Higgins, The New York Times; Compiler: jk, Odaily Planet Daily

Just days before elections in Montenegro, fugitive Terra founder Do Kwon wrote a letter claiming that “friends” in the cryptocurrency industry provided campaign funding for a leading candidate.

Do Kwon, detained in Podgorica, Montenegro, in March this year. Photograph: Stevo Vasiljevic/Reuters

Cryptocurrencies have not only had chaotic markets, they are now fueling political turmoil, disrupting a key election in the troubled Balkan nation of Montenegro, which has struggled to escape the grip of organized crime and Russian influence.

The political situation in Montenegro was thrown into turmoil when Do Kwon stepped in just days before the June 11 elections. Last year, the company's collapse caused (indirectly) a $2 trillion plunge across the industry.

**Do Kwon claimed in a handwritten letter that he had a "very successful investment relationship" with the leaders of the Europe Now Movement, and that "friends in the cryptocurrency industry" provided campaign funding as a A quid pro quo in exchange for the promise of a “crypto-friendly policy.” **The letter was sent to the authorities from his incarceration in Montenegro state prison since March last year.

It was expected that the European Now movement would have a clear popular mandate in the new parliamentary elections. The movement's campaign says it will raise wages and pensions, promises to clean up Montenegro's rampant crime and corruption under former longtime leader Milo Djukanovic, and put the country on track to join the European Union. the right way.

The Movement party won the most votes, but fell far short of expectations, only slightly ahead of a pro-Russia rival group that could now undermine efforts to form a stable pro-Western coalition government. 56% of voters turned out, also the lowest turnout on record.

** Milojko Spajic, the current movement leader in Europe, said Do Kwon's intervention "destroyed us". **He has been targeted in Do Kwon's letter, which was reviewed by The New York Times and exposed in local news outlets ahead of the election.

Milojko Spajic, the leader of the European Now Movement party, believes Do Kwon's letter has hurt his party's chances in national elections. Photograph: Stevo Vasiljevic/Reuters

In an interview, Spajic denounced Do Kwon's allegations as "extremely false" and called them a "dirty political game" designed to hurt his party's chances. Lawyers for Do Kwon did not dispute the authenticity of the letter.

As the founder of Terraform Labs, a graduate of Stanford University, Do Kwon was once hailed as a pioneer in the field of encryption. He designed the popular digital currency Luna, which he called the currency that will change the world, and proudly called its fans "Lunatics (lunatics). )".

The May 2022 crash of TerraUSD, designed by Luna and Do Kwon, turned him from an innovation hero into a fugitive with fraud charges from the US and South Korea.

He has since disappeared and his whereabouts remained a mystery until Montenegrin authorities announced his arrest in March this year. It is reported that he was arrested in the capital Podgorica while trying to board a private jet bound for Dubai, using a fake Costa Rican passport.

He has maintained that the passports are genuine, but a court in Podgorica on Monday found Do Kwon and a South Korean encryption business associate guilty of using forged travel documents and sentenced them to four months in prison.

It remains unclear what Do Kwon was doing in Montenegro before his arrest and what happened after his arrival. His activities after his arrest have been even more murky.

While Do Kwon was stripped of his electronic devices, South Korean prosecutors said the imprisoned Do Kwon appeared to have somehow moved $29 million from encrypted wallets linked to him, a report by Bloomberg News. confirmed.

Dritan Abazovic, Montenegro's interim prime minister and Spajic's political opponent, said there was no record of Do Kwon entering the country or checking in at a hotel, so authorities wanted to find out if he had local collaborators .

“I don’t accuse Spajic of anything,” Abazovic said in an interview, “but we need to understand what’s going on in the crypto community here and whether it’s money laundering and campaign financing issues. "

Election posters in Podgorica, Montenegro. Photo: Stevo Vasiljevic/Reuters

** The state of Montenegro has long been a hub for cigarette smuggling and cocaine trafficking during Djokanovic's more than three-decade-long rule, but in recent years it has promoted itself as the center of the cryptocurrency industry. **

In 2022, Spajic, then finance minister, predicted that the industry could account for nearly a third of Montenegro's economic output within three years.

For Spajic and other blockchain believers, cryptocurrencies are the next big thing, according to Zeliko Ivanovic, head of independent media group Vijesti.

"It was seen as an easy fix, a new secret recipe to replace the smuggling that had been Djokanovic's recipe for decades," Mr Ivanovic said. "But this miracle cure turned out to be a disaster."

**In order to attract talents, Montenegro granted V God citizenship last year. **

Buterin said that he "never had an opinion or had a conversation with Do Kwon, including through a third party", and "never donated money to the European Now Movement".

In May, he hosted a blockchain conference in Montenegro, attended by Spajic and interim Prime Minister Abazovic, in addition to tech enthusiasts.

With the goal of developing the country's cryptocurrency industry, Vitalik received citizenship of Montenegro. Photograph: Michael Ciaglo/Getty Images

Spajic posted a photo on Twitter of him with V God, holding his new Montenegro passport, with the caption: "We will bring the best talents in the world to Montenegro."

However, Montenegro's open approach also attracted George Cottrell, a British financier convicted of wire fraud in the United States, who later moved to Montenegro under the new name George Co. country.

According to official sources, Mr Cottrell left Montenegro for London on June 9, shortly after police raided the Salon Privé bar in the coastal resort of Tivat. Law enforcement officials believe he is connected to the bar, which houses gambling machines and "cryptocurrency ATMs" for buying and trading digital currencies.

Mr Cottrell's lawyer, Ratko Pantovic, who also represents the pub, said his British client had no ties to the casino or the cryptocurrency industry.

Interim Interior Minister Filip Adzic of Montenegro, who oversaw the police raid in Tivat, said Cottrell has not been charged with any crimes but is being investigated for possible illegal cryptocurrency activity.

Adzic said Montenegro needed to be cautious about this type of business that facilitates anonymous transactions because it "facilitates organized crime, facilitates terrorist financing and facilitates money laundering".

Police raided a bar in the Montenegro city of Tivat that housed gambling machines and "crypto ATMs" for buying and trading digital currencies. Photo by Savo Prelevic/AFP—Getty Images

Prosecutors in the U.S. and South Korea want to investigate three laptops and five mobile phones that authorities seized from Do Kwon when he was arrested, looking for clues to the billions of dollars invested in his digital currency that is now worth almost nothing. Of greater interest to Montenegrin authorities, however, was the information the devices might contain related to campaign finance and Do Kwon's ties to Spajic.

At a June 16 court hearing, **Do Kwon's lawyers said their client denied funding Spajic's election campaign. However, Do Kwon’s letter mentioned that “other friends in the cryptocurrency industry” contributed. **

"I have evidence of these communications and donations," Do Kwon said in the letter.

Spajic initially denied any ties to Do Kwon, but later admitted to knowing him since 2018 and investing money for him on behalf of an investment fund he said worked in Singapore — “He lied to us,” Spajic said. Izzy said — and met him again in Belgrade late last year.

It follows South Korean prosecutors' announcement in September that global police organization Interpol had issued a "red notice" for Do Kwon's arrest. Spajic said he only met with Do Kwon because "we want to get our money back".

Do Kwon offered a different account, claiming in the letter that Spajic wanted to discuss campaign finance. Spajic, who was planning to run for president at the time, explained that he was "raising a few million dollars for an upcoming campaign" and "asked me to contribute," he said. Do Kwon said he declined.

Spajic said it was "absolutely untrue" that they discussed campaign finance.

Milan Knezevic, the leader of the pro-Russian coalition who came in second in the June 11 election, was voted on. Photo by Boris Pejovic/EPA, Shutterstock

Milan Knezevic, the leader of the pro-Russia coalition who finished second in the election, said he was pleased with his team's unexpectedly strong result, partly because of the chaos caused by Do Kwon , but he still regrets that Montenegro has opened its doors to cryptocurrency experts.

Sitting in an office adorned with photos of Russian President Vladimir Putin, Knezhevich said that would be a better option than welcoming fighters from the Islamic State militant group.

He said: “At least with ISIS, you know what you’re fighting. But we don’t know what these crypto people are really doing.”