Cryptocurrencies and Montenegro: a short but intense story

"Montenegro has long been a center of cigarette and cocaine smuggling, but in the last few years it has developed into a center of cryptocurrency trading," writes the German newspaper Frankfurter Allgemeine Zeitung.

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Illustration, Photo: Shutterstock
Illustration, Photo: Shutterstock
Disclaimer: The translations are mostly done through AI translator and might not be 100% accurate.

"The story is both intricate and multifaceted. It reveals a lot about the relationship between crime and politics in Montenegro, but also about how poor countries and the crypto-currency economy compete to find new sources of income and how they win in the process," writes Frankfurter Allgemeine Zeitung in an article entitled: "Crypto-crime in Montenegro".

First, one is reminded of the well-known biographical data of the arrested South Korean citizen Do Kwon – his studies at Stanford, his pioneering role in the world of cryptocurrencies with his company Terraform Labs and the development of the "luna" cryptocurrency. Then follows the spectacular collapse of the company and the currency in May 2022, which made Do Kwon one of the most wanted fraudsters and fugitives on the planet. He created a debt of 40 billion dollars, and if the collapse of the crypto-currency market that followed is taken into account, then, according to the calculation of the "New York Times" cited by the author, the losses sum up to two trillion dollars.

The letter that disrupted the election

"Kwon disappeared, his whereabouts were unknown - until Montenegrin institutions announced in March that they had arrested him in Podgorica with a forged Costa Rican passport, when he wanted to board a private plane to Dubai." The court in Podgorica decided that Do Kwon and one of his South Korean business partners are guilty of using false travel documents and have been sentenced to four months in prison.

"What does this have to do with Prime Minister candidate Milojko Spajić? Kwon sent a handwritten letter from prison. In it, he claimed that he 'has a very successful investment relationship' with Spajić. In addition, 'friends in the crypto-currency economy' gave him (Spajic) money for his election campaign in exchange for a promise to pursue a 'crypto-friendly policy'."

The letter was published a few days before the election, and Spajić's party "Europe Now" was the leading force in the campaign, with promises of EU membership and the fight against crime and corruption. According to the German journalist, the party received the most votes, but in the elections it still fell short of expectations, because the polls before the elections spoke of almost 40 percent support. "In the end, she had only a narrow advantage over the pro-Russian alliance, which can threaten the formation of a stable pro-Western coalition majority," writes the German newspaper, adding that turnout was at a record low of 56 percent.

"Spajić quickly found the culprit: Kwon, who addressed the aforementioned letter before the election to him and which was leaked to the local media." As the Frankfurter Algemaine Zeitung writes, Spajić labeled the statements in the letter as false and part of a dirty political game.

"Kwon's lawyers did not dispute the authenticity of the letter. Dritan Abazović, the prime minister and Spajić's political rival, took advantage of that trouble with pleasure." The paper also quotes Abazović's words, who said that he is not accusing Spajić, but that it is necessary to clear up what is happening in the Montenegrin milieu of cryptocurrencies and see if she is involved. in money laundering to finance the pre-election campaign.

Transactions conducted from prison

The author of the text, journalist Franz Nestler, also lists Do Kwon's activities in prison that require explanations: "Although all his electronic devices were confiscated, it seems that the arrested Kwon managed to transfer 29 million dollars from an electronic wallet connected to him, they said South Korean prosecutors confirmed the news of the Bloomberg agency, which specializes in financial news. American and South Korean prosecutors have so far seized three laptop computers and five mobile phones. They are hoping for clues that lead to the missing billions of dollars, which were invested around the world in Do Kwon's currency, which is now completely worthless."

The relationship between Spajić and Do Kvon is particularly interesting for the Montenegrin public. At the hearing, Do Kwon's lawyers denied that he financed Spajic's campaign, but that other people involved in cryptocurrencies did so. Do Kwon stated in the letter that he had evidence of the communication and the amounts. The author also reminds that Spajić first denied any relationship with Do Kwon, and then admitted that he had known him since 2018. He claimed that he asked Do Kwon for money that a Singaporean fund - for which Spajić worked - invested in his cryptocurrency. Do Kwon denies such allegations, claiming that Spajić asked for money for the campaign, which he did not receive. And Spajić denies it.

Once smuggling – today cryptocurrency

"Milan Knežević, the leader of the pro-Russian bloc, the second strongest in the elections, says that he is happy because of the unexpectedly good result of his party, which is partly a consequence of the problem caused by Do Kwon. "It would be better to meet the fighters of the Islamic State - with them, at least you know what you're in for, but you have no idea what these people are doing with cryptocurrencies," said Knežević, who is sitting in an office decorated with a picture of Vladimir Putin.

At the end, the German journalist draws a conclusion: "Cryptocurrencies and Montenegro, it's a short but intense story so far." For a long time, Montenegro was the center of cigarette and cocaine smuggling, but in the last few years it has developed into a center of cryptocurrency trade. In 2022, Spajić, as the then Minister of Economy, predicted that in three years, cryptocurrency trade could make up a third of the national economic output."

The author also cites the opinion of the director of "Vijesti" from Podgorica, Željko Ivanović, who says that it was believed that cryptocurrencies are the next big thing, a new secret recipe that can replace smuggling. "But the miracle cure turned out to be a disaster."

The German journalist points out that Do Kwon is not the only link to the opaque world of cryptocurrencies, stating that the Russian-Canadian founder of the popular cryptocurrency platform "Ethereum", Vitalik Buterin, received Montenegrin citizenship in May, and Spajić proudly announced it on Twitter. Finally, there is the opinion of the Minister of the Interior, Filip Adžić, who says that the non-transparent cryptocurrency business is "good for organized crime, good for financing terrorism and good for money laundering".

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