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The corruption scandal that shakes the ecosystem of cryptocurrencies in Venezuela, with PDVSA in the middle

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The world of cryptocurrencies in Venezuela, very active due to the search for a refuge from inflation and the low cost of electricity required to operate with these assets, is shaken by a corruption scandal that has its epicenter in the PDVSA oil company.

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The government of Nicolás Maduro has banked heavily on crypto assets as a way to do this evade US financial sanctions against Venezuela, and even launched a state cryptocurrency, the petro, in 2018.

Things, however, took a turn: The State National Superintendence for Crypto Assets (SUNACRIP) became embroiled in a corruption scandal at PDVSA and other state-owned companies and institutions. The plot resulted in the arrests of dozens of officials and it led to the resignation of former powerful oil minister, Tareck El Aissami.

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After allegations by the Public Prosecutor’s Office of irregularities in the management of funds from oil operations carried out with crypto assets, the president of the superintendency, Joselit Ramírez, was arrested in March, as was the head of the institute’s digital mining operations, Rajiv Mosqueda. .

Computers used to mine Bitcoin in the Doctorminer mining showroom in Caracas on August 18, 2021. Photo AFP

Computers used to mine Bitcoin in the Doctorminer mining showroom in Caracas on August 18, 2021. Photo AFP

Paralysis

Cryptocurrency investors assure that, in the midst of the investigation, more orders to close digital mining farms (centers where these assets are produced) and exchanges (cryptocurrency trading platforms) They crippled the local ecosystem.

AFP has consulted judicial sources on the number of farms and exchanges affected, with no response so far.

“They’re torpedoing the mines. Find out what you need to find out, but why do they have to shut everything down?”This was asked by Humberto Quevedo, director of the private national association of cryptocurrencies (ASONACRIP) and of the specialized platform CryptoLand Venezuela, in dialogue with AFP, which calls for greater “transparency” on the part of the authorities.

“You have a problem and your solution is to grab a machine gun and kill everyone?” Quevedo asks.

Announcement with the acceptance of payments in different electronic ways according to the new currency conversion in Caracas.  photo by AFP

Announcement with the acceptance of payments in different electronic ways according to the new currency conversion in Caracas. photo by AFP

The Superintendency of Cryptoactives is now under the control of a supervisory board, but his office remains closed since the arrest of Ramírez. The silver metallic letters of the “SUNACRIP” sign at the building’s doors in downtown Caracas have also been removed, AFP found.

The use of cryptocurrency was high in Venezuela long before Maduro’s petro bet. These crypto assets they were seen as a refuge against chronic inflation and the constant depreciation of the local currency, the bolivar.

According to a survey presented last year at the United Nations Conference on Trade and Development, 10.3% of the Venezuelan population owns cryptocurrencies‘, compared to 8.3% in the US and 5% in the UK.

Mining of cryptocurrencies such as bitcoin has proliferated in the last decade in Venezuela, driven by the low cost of the energy required for its production or “extracted”, despite severe power problems. Initially harassed, the government cleared it when it turned into crypto assets and promoted it with state-owned mining farms.

SUNACRIP, created in 2018 by the Maduro government, has granted operating licenses.

The world of cryptocurrencies in Venezuela, very active in seeking refuge in the face of inflation and the low cost of electricity.  photo by AFP

The world of cryptocurrencies in Venezuela, very active in seeking refuge in the face of inflation and the low cost of electricity. photo by AFP

“Everyone who tried to legalize their status (before SUNACRIP) has been exposed,” Luis — a fictitious name to protect his identity — told AFP, who shut down two bitcoin mines in which he had about 500 cars. “Those who did it anonymously are better off”, he complains.

The Petro case

“I eliminated farms. It is absurd that they come and force you to shut everything down until further notice. All this puts us back in legal limbo,” he adds.

At the same time, the atmosphere has become even thinner in recent days due to the interruption of transactions with the petros, without explanation from the authorities. The use of this cryptocurrency has always been practically restricted to operations with the state.

“Suddenly and without warning” the petro blockchain, a technology that allows transactions to be recorded in that cryptocurrency, “stood paralysed, make transactions impossible”indicated a statement released by the CryptoLand platform over the weekend.

The block chain or “blockchain”, which had been crippled since Wednesday, was briefly reactivated on Saturday, then froze again until Monday.

A probable system error in quotes, which made it possible to buy petro at prices well below the market, preceded the situation.

“Hopefully all derivative services and apps (applications) will be restored little by little,” CryptoLand posted on Twitter.

Investors report that hundreds of petro user accounts they were stuck on the digital platform of the government’s social plans, which did not give an explanation of what happened.

AFP agency

Source: Clarin

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