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.

In 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.”

Long 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.”

Mr. 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.”

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 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, 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 contributed reporting from Podgorica and Tivat, Montenegro, and Choe Sang-Hun from Seoul.

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