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The original article, "How a Crypto Fugitive Upended the Politics of a Troubled Balkan Nation", is from The New York Times and is translated by Odaily JK.

Disclaimer: The following does not represent the views of Odaily and does not constitute investment advice.

Just days before the election in Montenegro, fugitive and Terra founder Do Kwon wrote a letter claiming that "friends" in the cryptocurrency industry provided campaign funding for a major candidate.

Do Kwon, detained in the city of Podgorica, Montenegro in March this year. Photo by Stevo Vasiljevic/Reuters

Cryptocurrencies not only have a chaotic market but are now causing political chaos, disrupting a crucial election in Montenegro, a troubled Balkan country that has been struggling to break free from organized crime and Russian influence.

Just days before the June 11th election, Do Kwon intervened, causing political turmoil in Montenegro. The collapse of his company last year indirectly resulted in a $2 trillion crash in the entire industry.

In a handwritten letter, Do Kwon claimed to have a "very successful investment relationship" with the leader of the Europe Now Movement and that "friends in the cryptocurrency industry" offered campaign funding in exchange for a promise of "friendly cryptocurrency policies." The letter was sent to the authorities while he was imprisoned in Montenegro since March last year.

It was believed that the Europe Now Movement would receive a clear mandate in the new parliamentary elections. The movement's campaign promised to raise wages and pensions and pledged to tackle the rampant crime and corruption issues under the previous long-time leader of Montenegro, Milo Djukanovic, to put the country on the right path to joining the European Union.

The Party of Sports won the most votes, but far less than expected, only slightly ahead of a pro-Russia opposition group that can now undermine efforts to form a stable pro-Western coalition government. The voter turnout of 56% also set a historic low.

Milojko Spajic, the current leader of the Party of Sports in Europe, said that Do Kwon's intervention "has destroyed us." He has become the target of Do Kwon's letter, which has been reviewed by The New York Times and exposed in local news media before the elections.

Milojko Spajic, the current leader of the Party of Sports in Europe, believes that Do Kwon's letter has harmed his party's chances in the national elections. Photo: Stevo Vasiljevic/Reuters

In an interview, Spajic condemned Do Kwon's accusations as "extremely false" and called it a "dirty political game" aimed at damaging his party's chances. Do Kwon's lawyer did not object to the authenticity of the letter.

As the founder of Terraform Labs and a graduate of Stanford University, Do Kwon has been hailed as a pioneer in the cryptocurrency field. He claimed that his popular digital currency, Luna, would change the world and proudly referred to its followers as "Lunatics."

In May 2022, the collapse of Luna and TerraUSD, designed by Do Kwon, turned him from an innovation hero into a fugitive, facing fraud charges from the United States and South Korea.

Since then, he disappeared, and his whereabouts remained a mystery until the authorities in Montenegro announced his arrest in March of this year. It is reported that he was arrested in the capital Podgorica while trying to board a private plane bound for Dubai, using a forged Costa Rican passport.

He has consistently claimed that the passport is authentic, but a court in Podgorica ruled on Monday that Do Kwon and his Korean crypto business partner were guilty of using forged travel documents and sentenced them to four months in prison.

What Do Kwon did in Montenegro before his arrest and what happened after his arrival remains unclear. His activities after the arrest are even more mysterious.

The Korean prosecutor said that although Do Kwon had been deprived of his electronic devices, the detained Do Kwon seemed to have transferred 29 million dollars from his associated cryptocurrency wallet in some way, which was confirmed by Bloomberg.

The temporary prime minister of Montenegro, Dritan Abazovic, a political opponent of Spajic, said that there is no record of Do Kwon entering the country or registering at a hotel, so the authorities are trying to determine if he had local collaborators.

"I don't accuse Spajic of anything," Abazovic said in an interview, "but we need to understand what is happening in the cryptocurrency community here and whether it involves money laundering and campaign funding."

Election poster in the city of Podgorica, Montenegro. Photo: Stevo Vasiljevic/Reuters

During Djukanovic's more than thirty years of rule, Montenegro has long been a center for cigarette smuggling and cocaine trafficking, but in recent years, it has promoted itself as a center for the cryptocurrency industry.

In 2022, Spajic, who was then the Minister of Finance, predicted that the industry could account for nearly one-third of Montenegro's economic output within three years.

The head of the independent media group "Vijesti", Zeljko Ivanovic, said that for Spajic and other blockchain believers, cryptocurrency is the next big thing.

"It is seen as a simple solution, a new secret recipe, to replace the smuggling activities that have been Djukanovic's recipe for decades," Mr. Ivanovic says. "But this magical cure eventually turned into a disaster."

To attract talent, Montenegro granted citizenship to Vitalik Buterin last year.

Vitalik Buterin said, "I have never had any opinions or conversations with Do Kwon, including through a third party," and "I have never donated to the European Now Movement party."

He held a blockchain conference in Montenegro this May, attended by tech enthusiasts as well as Spajic and interim Prime Minister Abazovic.

With the development of the country's cryptocurrency industry as the goal, V God obtained the citizenship of the Republic of Montenegro. Photo: Michael Ciaglo/Getty Images

Spaich tweeted a photo of him with V God, with V God holding his new Montenegrin passport, and the caption saying, "We will bring the world's best talents to Montenegro."

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

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

Ratko Pantovic, the lawyer representing Mr. Cottrell, also represents the bar and says his British client has no connection to the casino or cryptocurrency industry.

Filip Adzic, the temporary Minister of Internal Affairs of Montenegro in charge of the raid in Tivat, said that Mr. Cottrell has not been charged with any crimes, but an investigation is underway to determine if he was involved in potentially illegal cryptocurrency activities.

Adzic stated that Montenegro needs to be cautious about these businesses that promote anonymous transactions because they "benefit organized crime, terrorist financing, and money laundering."

Police raided a bar in the city of Tivat, Republic of Montenegro, which had gambling machines and "cryptocurrency ATMs" for buying and trading digital currencies. Photo: Savo Prelevic/AFP/Getty Images

The prosecutors from the United States and South Korea are hoping to investigate the three laptops and five mobile phones confiscated from Do Kwon when he was arrested, in search of clues to billions of dollars of digital currency investments that are now almost worthless. However, for the authorities in Montenegro, what is of more interest is the information that these devices may contain regarding campaign funding and Do Kwon's relationship with Spaic.

At the court hearing on June 16, Do Kwon's lawyers stated that their client denies funding Spaic's election campaign. However, in Do Kwon's letter, he mentions "other friends in the cryptocurrency industry" making contributions.

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

Initially, Spaic denied any connection with Do Kwon, but later admitted to knowing him since 2018 and representing an investment fund that claimed to work in Singapore to invest funds for him - "he deceived us," Spaic said - and met him again at the end of last year in Belgrade.

Prior to this, South Korean prosecutors announced in September that the International Criminal Police Organization had issued a "red notice" for the arrest of Do Kwon. Spaic stated that his meeting with Do Kwon was only because "we wanted to get our money back."

Do Kwon provided a different account, claiming in the letter that Spaic wanted to discuss campaign funding. He stated that Spaic, who was planning to run for president at the time, explained that he was "raising millions of dollars for the upcoming campaign" and "asked me to contribute." Do Kwon claimed to have refused.

Spaic stated that their discussion of campaign funding was "absolutely untrue."

Milan Knezevic, the leader of the pro-Russian alliance, came in second in the election held on June 11. Photo: Boris Pejovic/EPA, Shutterstock

In the election, Milan Knezevic, leader of the pro-Russian alliance who came in second place, expressed his satisfaction with the strong performance of his team, partly due to the chaos caused by Do Kwon. However, he still regrets that Montenegro has not opened its doors to cryptocurrency experts.

Sitting in his office adorned with photos of Russian President Putin, Knezevic stated that this would be a better choice compared to welcoming fighters from ISIS.

He said, "At least with ISIS, you know what you're up against. But we don't know what these cryptocurrency people are really doing."