Amid the rising concerns of role of crypto in the increasing corruption in Venezuela, it is anticipated that the nation’s crypto dream project has taken a back seat. Some experts claim that the nation’s oil-pegged Petro coin may be “dead.”
Reportedly, the coin was first launched in October 2018, and made headlines when its masterminds claimed it to be first state-backed crypto asset. Then, the Venezuelan government said that the coin was backed by oil, albeit reserves that had yet to be drilled.
The Petro is not [like] Bitcoin, which [computers] have to mine to validate transactions. It is an algorithm with a ceiling.
Henkel García, a financial analyst
Further, the state-run agency that designed the coin also claimed the coin would become a major tool for remittances and trade. Unfortunately, following a major crackdown on corruption in March that essentially saw the state crypto agency disbanded, the nation’s once-grand crypto plans now seems to be in tatters.
According to local media reports, since May, users have complained of “irregular behavior patterns” on the Petro blockchain and the state-issued PetroApp platform is now reportedly ridden with “flaws.” This suggests that little or no maintenance or development work is being done on both the app and the blockchain network.
Notably, the crackdown on crypto entities escalated after the case of corruption came to public attention. As reported by Todayq News, the crackdown’s highest-profile victim, Joselit Ramírez, the president of the National Superintendence of Cryptoassets (SUNACRIP), has been sentenced imprisonment.
On March 20, Venezuelan anti-corruption prosecutors sent a letter to the attorney general. They requested thestate oil company, Petróleos de Venezuela SA (PDVSA) officials be investigated, which led to the resignation of the company’s president on the same day.
Two days later, the Venezuelan president assigned PDVSA’s new chairman, Pedro Tellechea, as the country’s new oil minister. On March 18, Joselit Ramirez, SUNACRIP’s head, along with several other government officials, got arrested for being involved in corruption schemes. Referring to this, the media outlet stated that the investigations have “swept away an important part of SUNACRIP’s technical staff.”
Investigations had revealed that Venezuelan “transactions with cryptocurrencies” reportedly “made it possible” for corrupt government officials to “divert resources into the pockets” of ministers – without the knowledge of President Nicolás Maduro. Now, a new board has been placed in charge of crypto operations, but this body appears to have other priorities. As these ministers were the most crypto-keen of all Maduro’s political allies, there are now only very few crypto advocates left in the government.
Cryptocurrencies have ended up becoming the instruments of a group of corrupt […] politicians who wanted to embezzle the little money that was left in the Petróleos de Venezuela (PDVSA).
Omar Zambrano, economist
This crypto-related corruption scheme has gained international attention as local media reports stated that international sanctions against the nation had forced the country to sell oil “irregularly,” and carry out commercial operations “in the dark.” Sources suggest that the SUNACRIP and the Petro are now “nearing the end,” with some even commenting on its “regrets” about the “progressive decline” of the Petro.
Notably, such acts of disgrace bring the essentialism of crypto assets into question and trigger authorities to take a stringent approach towards the larger industry. Similar was the case this time as following this case the Venezuelan authorities urged local crypto miners to halt their operations temporarily.