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    How Do Kwon, a Crypto Fugitive, Upended the Politics of Montenegro

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    Only days before an election in Montenegro, a letter from Do Kwon, the fugitive founder of the Luna digital coin, claimed that crypto “friends” had provided campaign funding to a leading candidate.Already notorious as an agent of market mayhem, the crypto industry has now unleashed political havoc, too, upending a critical general election in Montenegro, a troubled Balkan nation struggling to shake off the grip of organized crime and the influence of Russia.Only days before a vote on June 11, the political landscape in Montenegro was thrown into disarray by the intervention of Do Kwon, the fugitive head of a failed crypto business whose collapse last year contributed to a $2 trillion crash across the industry.In a handwritten letter sent to the authorities from the Montenegrin jail where he has been held since March, Mr. Kwon claimed that he had “a very successful investment relationship” with the leader of the Europe Now Movement, the election front-runner, and 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 in elections for a new Parliament. Its campaign mixed populist promises to raise salaries and pensions with pledges to put the country on a clear path to joining the European Union by cleansing the crime and corruption that flourished under Montenegro’s former longtime leader Milo Djukanovic.The party still won the most votes, but fell far short of expectations, finishing just ahead of a rival group that supports Russia and that can now disrupt efforts to form a stable pro-Western coalition government. Only 56 percent of the electorate voted, a record low turnout.Mr. Kwon’s intervention “destroyed us,” said the Europe Now leader, Milojko Spajic, a target of the disgraced crypto entrepreneur’s letter, which was reviewed by The New York Times and whose existence leaked in the local news media before the vote.Milojko Spajic, the leader of the Europe Now Movement, believes Mr. Kwon’s letter hurt his party’s chances in national elections.Stevo Vasiljevic/ReutersIn an interview, Mr. Spajic denounced Mr. Kwon’s accusations as “super fake” and part of a “dirty political game” to hurt his party’s chances. Mr. Kwon’s lawyers have not disputed the letter’s authenticity.As a founder of Terraform Labs, the Stanford-educated Mr. Kwon was once hailed as a crypto trailblazer, responsible for the design of a popular digital coin, Luna, he said would change the world and whose fans he proudly referred to as “Lunatics.”The spectacular collapse in May 2022 of Luna and a second cryptocurrency that Mr. Kwon designed, TerraUSD, transformed him from a hero of innovation into a fugitive wanted by both the United States and South Korea on fraud charges.After that, he vanished, his whereabouts a mystery until the authorities in Montenegro announced in March that he had been arrested while trying to board a private plane to Dubai in Podgorica, the capital, using a forged Costa Rican passport.He had insisted it was genuine, but a Podgorica court on Monday found Mr. Kwon and a South Korean crypto business partner guilty of using forged travel documents and sentenced them to four months in jail.What Mr. Kwon was doing in Montenegro before his arrest and when he arrived is still unclear. His activities since his arrest are murkier.Though stripped of his electronic devices, the jailed Mr. Kwon appears to have somehow moved $29 million from a crypto wallet linked to him, South Korean prosecutors said, confirming a report by Bloomberg News.Dritan Abazovic, the acting prime minister of Montenegro and a political rival to Mr. Spajic, said there was no record of Mr. Kwon entering the country or registering at hotels, so the authorities want to establish whether he had local collaborators.“I’m not accusing Spajic of anything,” Mr. Abazovic said in an interview, “but we need to see what was happening in the crypto community here and whether it was involved in money laundering and campaign financing.”Campaign posters in Podgorica, Montenegro. Only 56 percent of the electorate voted in the election on June 11, the lowest turnout in decades.Stevo Vasiljevic/ReutersLong a center for cigarette smuggling and cocaine trafficking during Mr. Djukanovic’s more than three-decade rule, Montenegro has in recent years promoted itself as a center for the crypto industry.In 2022, Mr. Spajic, who was the finance minister at the time, predicted that the industry could account for nearly a third of Montenegro’s economic output within three years.For Mr. Spajic and fellow blockchain believers, crypto was the next Big Thing, according to Zeljko Ivanovic, the head of the independent media group Vijesti.“It was seen as an easy way out — a new secret recipe to replace the smuggling that had been Djukanovic’s recipe for decades,” Mr. Ivanovic said. “But the miracle cure turned out to be a disaster.”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.Mr. Buterin said he “never knowingly met or talked to Do Kwon, including through third parties,” and “never gave money to Europe Now.”In May, he hosted a blockchain conference in Montenegro that was attended by, in addition to high-tech enthusiasts, Mr. Spajic and the acting prime minister, Mr. Abazovic.The Ethereum founder Vitalik Buterin was awarded Montenegrin citizenship as part of an effort to develop a crypto industry in the country.Michael Ciaglo/Getty ImagesMr. Spajic posted a photograph on Twitter of himself with Mr. Buterin, who is holding up his new Montenegrin passport, and the message: “We will bring the best people in the world to Montenegro.”Montenegro’s welcoming ways, however, also attracted George Cottrell, a British financier convicted of wire fraud in the United States, who later moved to Montenegro under a new name, George Co.Mr. Cottrell, according to officials, left Montenegro for London on June 9, soon after the police raided Salon Privé, a bar in the coastal resort town of Tivat that law enforcement officials believe is connected to him. It features gambling machines and a “cryptomat,” used for buying and trading digital currencies.Ratko Pantovic, Mr. Cottrell’s lawyer, who also represents the bar, said his British client had no connection to the gambling salon or the crypto industry.Montenegro’s acting interior minister, Filip Adzic, who oversaw the police raid in Tivat, said Mr. Cottrell had not been charged with any crime but was being investigated for involvement in possibly illegal crypto activities.Montenegro, Mr. Adzic said, needed to be careful with a business that, because it facilitates anonymous transactions, “is good for organized crime, good for financing terrorists and good for money laundering.”The police raided a bar in Tivat, Montenegro, that featured gambling machines and a “cryptomat,” used for buying and trading digital currencies.Savo Prelevic/Agence France-Presse — Getty ImagesAmerican 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 for clues to what happened to billions of dollars invested in his now mostly worthless digital coins.Of more interest to Montenegrin authorities, however, is what they may contain relating to campaign financing and Mr. Kwon’s relationship with Mr. Spajic.In a court hearing on June 16, Mr. Kwon’s lawyers said their client denied having funded Mr. Spajic’s electoral campaign. Mr. Kwon’s letter, however, said that “other friends in the crypto industry” contributed.“I have evidence of these communications and contributions,” Mr. Kwon said in his letter.Mr. Spajic initially denied any connection to Mr. Kwon, but later acknowledged he had known him since 2018 and invested money with him on behalf of an investment fund he says he was working for in Singapore — “he cheated us,” Mr. Spajic said — and met him again late last year in Belgrade.That followed an announcement by South Korean prosecutors in September that Interpol, the global police organization, had issued a “red notice” for Mr. Kwon’s arrest. Mr. Spajic said he had met Mr. Kwon only because “we wanted our money back.”Mr. Kwon gave a different account, claiming in his letter that Mr. Spajic wanted to discuss campaign financing. He said Mr. Spajic, who was then planning to run for the presidency, explained that he was “raising few million USD for the upcoming campaign” and “asked me to make a contribution.” Mr. Kwon said he declined.Mr. Spajic said it was “absolutely false” that they discussed campaign financing.Milan Knezevic, leader of the pro-Russian bloc that finished second in the June 11 election, casts his ballot.Boris Pejovic/EPA, via ShutterstockMilan Knezevic, the leader of the pro-Russian bloc that finished second in the election, said he relished his group’s unexpectedly strong result, achieved in part because of the disruption caused by Mr. Kwon, but he still regretted that Montenegro had opened its arms to crypto mavens.It would have been better, Mr. Knezevic said, sitting in an office decorated with pictures of President Vladimir V. Putin of Russia, to have welcomed fighters from the Islamic State militant group.“At least with ISIS, you know what you are up against,” he said. “But we have no idea what these crypto people are really doing.”Alisa Dogramadzieva More

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      Milo Djukanovic Is Defeated in Montenegro’s Presidential Election

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      The incumbent, Milo Djukanovic, conceded to Jakov Milatovic, who had campaigned on pledges to root out corruption and organized crime.The shape-shifting president of Montenegro, Milo Djukanovic, Europe’s longest-serving elected leader, lost a re-election bid on Sunday, according to provisional official results, raising hopes across the Balkans of a long-awaited end to a political era stamped by the Yugoslav wars of the early 1990s.The vote on Sunday was a runoff between the two top finishers among seven candidates competing in a first round last month. Mr. Djukanovic, 61, conceded defeat late Sunday to Jakov Milatovic, 36, an Oxford-educated economist who campaigned on pledges to root out corruption and organized crime.Mr. Milatovic won decisively with about 60 percent of the vote, with 70 percent counted as of Sunday night.Mr. Djukanovic said he respected the outcome of the vote and wished Mr. Milatovic success, adding, “If he is successful, it means that Montenegro can be a successful country.”Mr. Milatovic, endorsed by most of the losing candidates in the first round, had been expected to win, but Mr. Djukanovic, a consummate political survivor, had dominated Montenegro for so long — he served four terms as prime minister and two as president — that his defeat still caused a sensation.“Tonight is the night we have been waiting for for more than 30 years,” Mr. Milatovic told supporters in Podgorica, the Montenegrin capital. “We said goodbye to crime and corruption. This is a historic day for everyone.”Mr. Djukanovic has been dogged throughout his career by accusations of links to organized crime, which he has strenuously denied.The defeat of a leader who began his political career in the former Yugoslavia lifted the spirits of opposition groups elsewhere in the Balkans, particularly in neighboring Serbia, whose own entrenched veteran leader, Aleksandar Vucic, also got his start in Yugoslavia and has been a fixture of Serbian politics for decades.“We hope that this victory will be a clear signal to everyone that the previous policies of division and conflict are dying because the entire region needs new people and new energy,” the Serbian opposition party Zajedno said in a statement welcoming Mr. Milatovic’s victory.Yugoslavia, a federation of republics, dissolved in 1992, but unlike, Slovenia, Croatia, Bosnia and Macedonia, which had all declared independence, Montenegro and Serbia formed a new federal state called Serbia-Montenegro. That entity, shaky from the start, fell apart after Montenegro declared independence in 2006.Mr. Milatovic, center, with his supporters in Podgorica, Montenegro, after declaring victory during the presidential runoff.Savo Prelevic/Agence France-Presse — Getty ImagesMr. Djukanovic first came to power in 1991 as prime minister of Montenegro, then still part of Yugoslavia. Initially a close ally of Slobodan Milosevic, Serbia’s Russia-friendly strongman leader, he later shifted his allegiances to the United States, securing Montenegro’s entry to NATO in 2017 despite widespread public hostility to a military alliance that had bombed the country in 1999.Mr. Djukanovic also sought membership in the European Union, but that effort, which began in 2008, stumbled largely because of Montenegro’s reputation for sheltering criminals.Mr. Milatovic vowed on Sunday to get the country into the bloc before the end of his five-year term as president.A political novice, Mr. Milatovic ran as a candidate for the newly formed party Europe Now and promised to shed Montenegro’s unsavory image. He accused Mr. Djukanovic of turning the country into the “Colombia of the Balkans,” a reference to Montenegro’s role as a hub for smuggling cigarettes and other contraband.Mr. Djukanovic was close to Russia in the 1990s and 2000s, when Montenegro opened its doors to a flood of investment from Russia and became a popular holiday destination for Russians. But he later threw his lot in with the West, accusing Russia of orchestrating what his officials said was a botched 2016 coup aimed at torpedoing the country’s NATO membership.He also reached out to China, sealing a deal with that country’s state companies for the construction of a “highway to nowhere” that cost nearly $1 billion and severely strained Montenegro’s finances.Mr. Djukanovic tried to paint Mr. Milatovic, his electoral rival, as a stalking horse for Serb interests, citing his endorsement by pro-Serb politicians. But that was a hard sell given Mr. Milatovic’s previous career with Deutsche Bank and the European Bank for Reconstruction and Development, and the incumbent’s own long record of flip-flops and questionable dealings.Alisa Dogramadzieva More

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      in World Politics

      When Will Montenegro’s Dreams of Joining the EU Become Reality?

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      Four students, rejoicing in the good news, partied in one of the numerous Irish pubs in Podgorica. Fed up with nationalism, populism and other breeds of pestilence engulfing the Western Balkan region, they reveled in a brighter future awaiting them in the European Union. It was summertime, the Thessaloniki Summit had just ended, and the promise of EU membership had been conveyed to the region.

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      For the students, the EU was not a gold pot you could dip your hand in and harvest the low-hanging fruit. Quite the contrary, at their very core, they felt that the EU resonated with them in a peculiar but enchanting harmony. German punctuality, cars and the Scorpions’ “Wind of Change”; French “liberte, egalite, fraternite” and wine; Italian canzone and eternal Rome; Greek philosophy and the cradle of democracy; Spanish flamenco and the mesmerizing sound of guitars — all came together in a beautiful constellation, comprising the 12 stars on the blue flag.

      Fast forward two decades and one of those four students has become the minister of foreign affairs of Montenegro. Without pretending to be Dr. Nicolaes Tulp from the famous Rembrandt painting, looking back at the lost time in between, I cannot help but ask whether both Montenegro and the EU could have done better. Are we where we wanted to be?

      Montenegro Calling

      Over those years since Thessaloniki, Montenegro has accomplished a lot. It opened up its economy and became a WTO member. It has no open issues with its neighbors. It joined NATO in 2017 and is ahead of others in the region in the EU accession process. It is also the only aspiring member country showing 100% alignment with EU foreign policy. Looking at these achievements, some may wonder why Montenegro still isn’t part of the European Union.

      Well, things are never that simple. In contrast to the undeniable success of its foreign policy, the murky labyrinths of domestic politics are still blocking the country’s path to EU membership. Since negotiations with Brussels began, the ruling party has acted as if it were the sole custodian of the process. But to be successful, the course must involve the whole of society and political spectrum. Montenegro is joining the EU as a community, not as a ruling majority. Every success in this effort belongs to all political stakeholders, NGOs and other participants. The same applies to all failures.

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      Of course, the main responsibility lies with the government that creates the framework for how the accession will evolve, but the sustainability of the process can only be attained if utmost inclusion is assured. There was a persistent lack of political will to tackle the most treacherous pestilence of any society — corruption and organized crime. For too long, political stakeholders turned a blind eye to these flaws blocking Montenegro’s European path and deferred the attempts to eradicate them to better times.

      Finally, the regional context of the Western Balkans further complicated Montenegro’s course toward Brussels. No matter how much one excels in class, the performance of your classmates can hold you back. Montenegro has been a beacon of good neighborly relations. However, it exists in a region permeated with bilateral disputes that have detrimental spillover effects — an endless game of thrones.

      But every cloud always has a silver lining. In August 2020, the Democratic Party of Socialists — the heir of the Communist Party — headed by President Milo Djukanovic, suffered defeat in elections, marking the first peaceful transition of power after nearly 30 years of one-party rule. The process has been smooth; the absence of riots, rallies or protests on the streets showed how mature the Montenegrin society has become.

      The new political habitat brought to the surface new hopes, zeal and also stakeholders. There emerged a myriad of new, young politicians, with political roots in neither the Communist Party of old nor in the nationalist blocs. Young and prominent, they shine brightly, unburdened by the dark clouds of the wars of the 1990s and the legacy of clientelism. They are progressive, Western-orientated, and they truly walk the talk. They present a stark contrast to the ruling elites of the past, the indoctrinated ex-members of the Communist Party who, despite being able to subscribe to the messages coming from our European partners, never genuinely understood them. 

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      And how could they? A vast majority of these party cadres never lived abroad, never left the confines of former Yugoslavia and seldom spoke foreign languages. Unlike them, the new generations are fully in sync with the heartbeat of Europe. They have been raised on Western films, music and culture. They have studied or lived abroad and speak at least one foreign language. Most importantly, they detest corruption. Unlike their predecessors, these new Montenegrins are law-abiding not because the criminal code demands it, but because they find corruption to be a great social ignominy that mars the country’s image. In their mindset, corruption is a red line that must not be crossed.

      Against the backdrop of this mixed bag of legacies, the new government has maintained the same foreign policy and conducted, in parallel, an intrepid fight against corruption and organized crime, achieving outstanding results in a very short period of time. These results have been recognized by the EU and the international community at large.

      Thanks to these accomplishments, the myth that only one political party could lead Montenegro toward EU membership has been debunked. Montenegro’s EU and NATO partners have realized that other, young and genuinely progressive political forces are capable to reach the final destination of the country’s EU journey and that they are sparing no effort to deliver. But again, this is a process that belongs to all Montenegrins. Membership in the EU is voluntary and requires dialogue and cooperation from all sides of the political spectrum, no matter how hard it may sometimes be.

      Brussels Calling

      Let us now look at the situation from the EU’s perspective.

      It is widely known that every structure has, among others, a raison d’être, one where others look up to it and find it worth emulating. Without this interaction, its allure would be in vain, creating an inwardly-oriented edifice. This approach is embedded in the EU Global Strategy 2016, meaning that the union must become a more globally-present and assertive international actor. Its enlargement policy, which compels countries to conduct reforms to better align with the EU, is its most appealing stratagem. We in the Western Balkans understand that most clearly.  

      Societies in the former communist countries, from “Sczeczin in the Baltics to Trieste in the Adriatic,” hold this to be a self-evident truth. Enlargement policy has had a hugely transformative effect on all its beneficiary countries and represents the best of Europe to date — its attested power to unite in diversity. This is even more remarkable given the fact that the past decade has not been the easiest ride for the EU. Many crises befell the bloc one after another, including the 2008 global financial crisis, the Arab Spring, the 2015 migrant crisis, Brexit and now COVID-19.

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      I don’t think it would be wrong to suggest that some states might not have survived these great ordeals if the union, the spiritus movens of European nations and values, had not been there to support them. This structure has proved time and time again that democracies might be shaken, but, when united, they will, at the end of the day, always prevail.

      There is no doubt that the EU needs to enter calmer waters in order to recuperate from a decade of crises before it can continue to expand. Nonetheless, the dream of European might is still vivid and alive among those who have been dreaming about such a European future for almost two decades.

      For all our sakes, we should keep sharing this approach together. Enlargement is a question of credibility, something that the US realized in the wake of the Cold War and manifested in the motto “the US promises — the US delivers.” The EU, if it wishes to have a truly global status, should act along the same principle.

      In the case of the EU, credibility is twofold. First, neither Brussels nor the member states should permit themselves to leave a geostrategic blackhole in the heart of the continent. It would be a blunder, as it would lead to the penetration of other global opponents in the union’s backyard. If the EU fails to secure the very heart of the continent, it will become its Achilles’ heel that would prevent the union from expanding, consolidating and deepening.

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      On the other hand, it is also an issue of credibility for the aspiring countries. Since 2003, only two candidates have become member states, so if enlargement becomes too much of a moving target, at the end of the day, the aspiring countries might start looking to other centers of power that are more credible, reliable and able to deliver on promises.

      The Western Balkans is the only region where enlargement coincides with reconciliation among nations. And if incentives for good behavior disappear, bad behavior might prevail.

      For all these reasons, the EU has to be prudent, astute and bold enough to realize that it is much better to have the aspiring countries at the table for the sake of its future, stability and raison d’être.

      The Last Mile

      The case of Montenegro should be an easy one. A country of 620,000 inhabitants, with 75% in support for EU and NATO membership, as well as being fully committed to EU foreign policy, is something that the union could easily digest. A country this size could not, by any means, hamper the EU decision-making process.

      The benefits of this easy enlargement would be manifold. It would demonstrate that, in spite of some setbacks along the way, the EU is still delivering. That would, beyond any doubt, reinvigorate mutual trust. Furthermore, the power of the Montenegrin example would encourage other Western Balkan countries to show real interest in becoming the next member states.

      At the same time, it would be a strong signal to third parties that the region has not been forgotten, that the EU has just made a short break and now, again, claims its full right to it. That would make life easier for NATO as well by providing stability and security on its southern flank.

      The best journeys are never easy or short. But one old European state, too small to have enemies, too smart to create them and too proud to be talked down to by anyone has been on the road for almost two decades, is hurrying toward the European family of nations where it has always belonged. It is high time for Montenegro to get there and for the story of those distant student dreams and hopes, music and harmony to have a happy ending.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More