September 30, 2023

The establishment of sanctions by the Trump administration towards PDVSA, the Venezuelan state oil company, forced the government in the country to find alternative means of paying for crude oil. According to reports, more than $3 billion is missing from these payments, which were brokered by national crypto watchdog Sunacrip. However, the documents reviewed estimate the hole could be closer to $20 billion. As a result, Oil Minister Tarek El Aissamy stepped down and the former head of Suncrip, Joselit Ramirez, was arrested as part of a corruption investigation. In addition, Suncrip is shutting down bitcoin mining nationwide “while things calm down.”

How Venezuela Used Crypto To Sell Oil, Bypassing US Sanctions

In January 2019, when Venezuela’s state oil company PDVSA Involved Among entities sanctioned by the US government (as part of measures taken by Washington to torpedo Venezuelan President Nicolás Maduro’s efforts to keep the country afloat), crypto emerged as an alternative to living with these sanctions. .

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While the use of crypto to circumvent large-scale restrictions was recently rumored in the country statement Alejandro Teran, a member of ICM Proyectos 2021, a local oil consulting firm, confirmed that PDVSA used crypto as a way to circumvent these sanctions.

In a statement to local newspaper Ultimas Noticias, Alejandro Teran explained how the deals were done. PDVSA reportedly used middlemen who were responsible for handling payments and finding interested third-party buyers for Venezuelan oil. he explained:

The government’s strategy was correct; Namely, to find private operators to pump oil into the world market, bypassing the blockade.

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Hevar Castro, a local analyst, explains that selling oil involves using these middlemen who broker oil with international companies, who obtain oil in deep-sea activities that involve the process of offloading from ship to ship. Let’s resort to According to him, this is the reality that countries selling banned goods must face. Castro says the oil is sold at a deep discount, and middlemen get paid after the oil is delivered.

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How Crypto Ended Up at the Center of a $24 Billion Internal Corruption Scheme in Venezuela - Bitcoin Mining Shutdown Consequences
Former Suncrip chief Joselit Ramirez (right) and Venezuelan President Nicolás Maduro. Source: @joselitramirez Instagram account.

Castro States America These intermediaries “get paid in different ways, mainly in crypto for its high liquidity, autonomy, and easy storage.” And that’s where Sunacrip comes into play, using various accounts and cryptocurrency wallets to obscure the source of the money and exchange it for US dollars in cash in countries like Colombia, that too at a discount.

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There is already evidence that supports the use of third-party brokers to sell Venezuelan oil to foreign countries and companies. In October, five Russian citizens and two Venezuelan oil brokers were indicted on charges of money laundering and sanctions evasion. indictment shows that the parties involved brokered the 500,000-oil-barrel deal using usdtA stable currency pegged to a dollar.

However, analysts agree that this is where the system failed, as these funds were not being converted into cash on their way to Venezuelan accounts. Teran believes that Suncrip acted as a Trojan horse of sorts, and the resources did not reach Venezuelan coffers. The situation worsened in December when the government finally learned that these resources were not registered.

Not only was oil subject to these maneuvers, oil derivatives such as coke were also part of brokered resources for European countries, which needed them because of the complicated situation resulting from the Russia–Ukraine conflict.

While initial reports suggest that $3 billion was lost in these sanctions-evasion maneuvers, Teran suggested that the figure may be closer to $5 billion.

The hole gets bigger — potentially $20 billion

However, other sources indicate even larger figures relating to the use of intermediaries. documents reportedly reviewed reuters It is indicated that 84% of the deals brokered were not paid by these middlemen. This represents a loss of orders of $21.2 billion in invoices, with nearly $4 billion potentially unrecoverable because tankers receiving crude did not pay for a portion of the oil received.

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PDVSA using a lesser-known network of middlemen is believed to be the result, after it was approved by the US Treasury Department in 2020, of abandoning deals with Rosneft, a Russian oil firm, and also a range of Mexican brokers. Is. were also approved.

The Venezuelan government has conducted a series of arrests and crackdowns, arresting several high-profile individuals in the PDVSA. Antonio Perez Suarez, the company’s former vice president of supply and merchandising, has been arrested along with 20 other executives who worked with him.

How Crypto Ended Up at the Center of a $24 Billion Internal Corruption Scheme in Venezuela - Bitcoin Mining Shutdown Consequences
Tarek El Aissamy on the pre-sale of the Venezuelan cryptocurrency, Petro. Source: Venezuelan Press.

Venezuelan Oil Minister Tarek El Aissami steeped in Down on March 20, vowed to cooperate with the ongoing investigation. Investigation and custody are being handled by the Anticorruption Police, created in 2014. directly by Maduro, “to destroy these mafias that have penetrated the spheres of the Venezuelan economic, political and judicial system.”

Among the first to be arrested as part of this corruption investigation was Joselit Ramirez, the former head of Suncrip, who was arrested on 18 March. Previous management of the organization.

El Aissami and Ramirez are part of a group of 14 high-ranking Venezuelan government figures indicted by the US government in March 2020 on charges of narco-terrorism, corruption and drug trafficking.

A nationwide crypto mining ban

This whole situation has resulted in a nationwide mining ban, which is being implemented by Suncrip’s new administrative board as part of an investigation and reorganization of the organization. according to reports from BincryptoThis week Sunacrip is shutting down all registered bitcoin mining operations using state power company Corpoelec, which is disconnecting them from the power grid.

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The largest crypto mining operations have already been disconnected from the national grid in several of Venezuela’s major states, including Lara, Carabobo, Miranda and the Capital District. This is reportedly causing mining companies to lose $40,000 to $1,000,000 for every month that passes without operations. Miners are being forced to wait for Suncrip to restructure and cease operations “until things calm down,” without giving an estimated date to resume.

What do you think about the involvement of crypto in oil sales in Venezuela and its importance in the corruption investigation being handled by President Nicolás Maduro? Tell us in the comments section below.

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