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Maduro Defies US: Venezuela Doubles Down on Crypto to Bypass Sanctions

Published June 18, 2024 12:43 PM
Teuta Franjkovic
Published June 18, 2024 12:43 PM

Key Takeaways

  • Venezuela continues to leverage cryptocurrency to sidestep US sanctions.
  • Crypto remains central in Venezuela despite a halt in crypto activities and a major corruption case involving oil sales.
  • The Biden administration has reinstated sanctions, alleging that President Maduro failed to create a fair electoral environment for the upcoming July elections.

According to dissidents and cryptocurrency analysts, Venezuela is expected to continue leveraging cryptocurrency to circumvent the latest US sanctions imposed last month.

The Nicolas Maduro administration may use cryptocurrency to mitigate the impact of renewed sanctions  on oil and gold, as it has done previously.

Venezuela Uses Crypto to Dodge US Sanctions Amid Corruption Scandal

The Biden administration reinstated the sanctions , accusing Maduro of failing to honor agreements intended to ensure a fair environment for the upcoming presidential election on July 28.

Andrew Fierman, head of national security intelligence at Chainalysis, a blockchain security firm, confirmed  that crypto has been used before, combined with a wide array of methods over the years. He stated that when discussing regimes subject to sanctions, they typically explore a variety of ways to evade those sanctions.

He said :

“When you’re talking about regimes that are subject to sanctions, they’re typically going to look for a variety of ways to evade those sanctions. The Venezuelan government and the Maduro regime have been doing this across a wide array of methods over the years.”

Venezuelan authorities halted activities in the cryptocurrency industry, including Bitcoin mining, due to a multi-billion dollar corruption case involving cryptocurrency and oil sales.

Despite the involvement of the cryptocurrency watchdog agency SUNACRIP, its former head Joselit Ramirez, and other high-ranking ministers in the scandal, cryptocurrency continues to be a primary tool in these operations. This information is highlighted in the “Crypto in Venezuela: Two Sides of a Coin ” report issued by the Woodrow Wilson International Center in April.

López and Doucette wrote :

“Every dollar misappropriated by the Maduro regime rightfully belongs to the Venezuelan people. The billions that have vanished in recent years represent a grotesque sum, which could have been pivotal in revitalizing the country’s faltering economy. Instead, Maduro’s embrace of cryptocurrency exploited an emerging technology to carve out a new pathway for diverting the nation’s riches, further impoverishing its citizens.”

$70M in Crypto Moved by Venezuelan Regulator Amid Sanctions Probe

A blockchain analysis conducted by Chainalysis revealed that SUNACRIP — the National Superintendency of Crypto Assets and Related Activities, known by its Spanish acronym — was actively transferring substantial amounts of tokens across multiple accounts within various cryptocurrency services.

The blockchain data traced these activities to a number of addresses that could be managed by SUNACRIP or someone closely associated with the organization, processing more than $70 million in various stablecoins to facilitate transactions.

In response to a request for more information regarding operations seized by the US in transactions where the Venezuelan government used cryptocurrencies to evade sanctions, Chainalysis stated, “at this time, we don’t have data to share on the number of seized crypto transactions that have been linked to the Venezuelan government.”

Suspending Petro Amid Corruption Probe Involving State Oil Payments

The Venezuelan government introduced its own cryptocurrency, the Petro, in 2018. This token, backed by the country’s oil and mineral reserves, was promoted as an alternative to the Venezuelan bolívar amidst rampant hyperinflation and as a mechanism to circumvent severe US sanctions.

The government mandated financial institutions to report balances in both bolívares and Petros, though the Petro primarily served a symbolic role and offered minimal practical utility for the average citizen.

In January, the Venezuelan government suspended the use  of the Petro, initiating an investigation into a significant corruption case involving the misuse of crypto wallets. These wallets were allegedly used to divert payments intended for the state-run oil company, Petróleos de Venezuela SA.

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