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Montenegro leaders turn on crypto after Vitalik’s Zuzalu fest. The reason: Do Kwon

  • Do Kwon roils runup to Montenegro election with letter describing ‘financial relationship’ with leading candidate.
  • Montenegrin officials race to distance themselves from Terra founder as crypto becomes campaign issue.
  • Do Kwon’s bid for bail remains in limbo as US and South Korean officials pursue extradition.

Less than a month after Vitalik Buterin celebrated the revolutionary potential of Ethereum and blockchain technology in Montenegro, the Balkan nation’s political leaders have excoriated crypto as a scourge.

“It would have been better if ISIS came to us, than the crypto community,” Milan Knežević, a member of the government’s National Security Council, told reporters in a press conference Wednesday.

The cause wasn’t Buterin or his Zuzalu conference at luxe resort on the Montenegro coast, which featured appearances by the nation’s leaders. It was Do Kwon, the onetime “crypto king,” who is sitting in a jail cell in Montenegro awaiting trial for passport fraud.

Controversial letter

On Monday, Kwon reportedly sent a handwritten letter to Montenegro’s premier and top justice officials describing his “financial and business relationship” with Milojko Spajić, the man favoured to be the nation’s next prime minister.

Now the letter is roiling the runup to Montenegro’s parliamentary election on Sunday, June 11. Kwon’s message, which was discussed during a National Security Council meeting Wednesday morning, says crypto entrepreneur met Spajić in Belgrade, the Serbian capital, while he was on the run from Interpol at the end of 2022, according to Vijesti, a local newspaper that reported it had access to the document.

Spajić, a crypto supporter who attended Buterin’s exclusive Zuzalu retreat, immediately distanced himself from Kwon.

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“Do Kwon is a fraudster who defrauded millions of people, including my friends and the company I worked for, when we invested in this project in early 2018,” Spajić told Vijesti.

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Kwon is wanted by both the US and South Korean authorities in connection with the $60 billion collapse of the Terra blockchain network in May 2022. Kwon, a 31-year-old South Korean native, allegedly defrauded investors in Terra, a venture he founded that offered a stablecoin and various interlocking crypto businesses with their own tokens.

‘It would have been better if ISIS came to us, than the crypto community.’

—  Milan Knežević

The full contents of Kwon’s letter have not been published but it has become a furore ahead of the election and inflamed opinion about cryptocurrencies in a nation that has long attracted luminaries such as Buterin for its embrace of the industry.

“Do Kwon moved around the Balkans like Mick Jagger,” said Knezevic, the National Security Council member who is a member of Montenegro’s parliament running for reelection and opposes Spajić and his Europe Now party.

Spajić did not respond to a request for comment from DL News. Neither did Kwon’s lawyer.

Family atmosphere

The dustup prompted Interior Minister Filip Adzic to tell reporters Spajić met Kwon while in Serbia.

“We had information that they met in a family atmosphere, that they met even after the moment when he was on the wanted list,” he said, according to Vijesti. “We also have the street in Belgrade where they met.”

Prime Minister Dritan Abazovic, who is not standing in Sunday’s election, told local reporters it would “not be good” for Spajić to be associated with Kwon.

“We cannot become a breeding ground for global fraudsters, even if they use blockchain or anything else,” he told BORBA, the publication that reported on Kwon’s letter.

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American and Korean prosecutors want to extradite Kwon to their respective countries to face justice. But first Montenegrin authorities plan to try Kwon for allegedly using a fake Costa Rican passport to try and leave for Dubai in March on a private jet.

Kwon’s cameo in Montenegrin politics comes amid drama in his legal camp. Last week, he lost his local lawyer, Branko Anđelić, over strategy disagreements on extradition proceedings with Kwon’s US lawyers, according to local press reports.

Mr Anđelić did not respond to DL News requests for comment.

Bail hearings

And Kwon’s legal team is labouring to try and get him sprung from detention on bail. On June 4, a judge in Podgorica, Montenegro’s capital, reversed a lower court decision and granted Kwon bail for €400,000 ($429,000). But prosecutor Haris Šabotić appealed the ruling and a new decision is pending.

If he is released on bail, Kwon would be subject to an international arrest warrant issued by Interpol last year at the request of South Korean prosecutors, Montenegrin police told DL News. So he could wind up back in detention on that matter as extradition proceedings begin.

Have a tip about Do Kwon or other crypto figures? Contact the authors at ana@dlnews.com and isabel@dlnews.com.