Already notorious for causing market mayhem, the crypto industry has now caused political havoc too, disrupting a critical general election in Montenegro – a troubled Balkan nation trying to break free from the grip of organized crime and Russia’s influence.
Just days before the June 11th vote, the political landscape was thrown into disarray by the intervention of Do Kwon, the fugitive head of a failed crypto business. In a handwritten letter from the Montenegrin jail where he is being held, Mr. Kwon claimed to have had “a very successful investment relationship” with the leader of the Europe Now Movement, the election front-runner. He also alleged that “friends in the crypto industry” had provided campaign funding in return for pledges of “crypto-friendly policies”.
Europe Now had been expected to win a decisive popular mandate, however, the party still emerged victorious, but fell far short of expectations, finishing just ahead of a rival group that supports Russia and can now disrupt efforts to form a stable pro-Western coalition government. Only 56% of the electorate voted, a record low turnout.
Mr. Spajic, the target of the disgraced crypto entrepreneur’s letter, denounced the accusations as “super fake” and part of a “dirty political game” to hurt his party’s chances. As a founder of Terraform Labs, Do Kwon was once hailed as a crypto trailblazer, responsible for the design of a popular digital coin – Luna – whose fans he proudly referred to as “Lunatics”. However, the spectacular collapse of Luna and a second cryptocurrency that Mr. Kwon designed, TerraUSD, in May 2022, transformed him from a hero of innovation to a fugitive wanted by both the US and South Korea on fraud charges.
Eager to attract talent, Montenegro last year awarded citizenship to Vitalik Buterin, a Russian-Canadian and the founder of Ethereum – the most popular cryptocurrency platform. Meanwhile, George Cottrell, a British financier convicted of wire fraud in the US, moved to Montenegro under a new name. Montenegro has promoted itself as a center for the crypto industry, and Mr. Spajic has predicted that the industry could account for nearly a third of the nation’s economic output within three years.
Montenegro’s welcoming ways, however, have also attracted criminals and those involved in illegal crypto activities. The authorities are now trying to establish whether the crypto community here was involved in money laundering and campaign financing.
American and South Korean prosecutors want to examine three laptops and five cellphones seized by the authorities from Mr. Kwon at the time of his arrest, as well as what evidence Mr. Kwon may have of campaign financing and his relationship with Mr. Spajic. In a court hearing on June 16th, Mr. Kwon’s lawyers said their client denied having funded Mr. Spajic’s electoral campaign.
Milan Knezevic, the leader of the pro-Russian bloc that finished second in the election, said he was glad of their unexpectedly strong result, achieved partly due to the disruption caused by Mr. Kwon. However, he lamented Montenegro
