The world of cryptocurrencies in Venezuela, very active due to the search for refuge from inflation and the low cost of electricity necessary to operate with these assets, is shaken by a corruption scandal that has its epicenter in the PDVSA oil company.
The government of Nicolas Maduro bet heavily on crypto assets as a way to circumvent US financial sanctions against Venezuela, and even launched a state cryptocurrency, the petro, in 2018.
Things, however, took a turn: the state National Superintendency of Cryptoactives (SUNACRIP) became entangled in a corruption scandal at PDVSA and other state companies and institutions. The plot has left dozens of officials arrested and led to the resignation of the once powerful oil minister, Tareck El Aissami.
Following complaints by the prosecutor, of irregularities in the management of funds from oil operations carried out with cryptoactives, the president of the superintendency, Joselit Ramirez, was arrested in March, as was the head of digital mining operations of the institution, Rajiv Mosqueda. .
Investors in cryptocurrencies assure that, in the midst of investigations, multiple orders to shut down digital mining farms (centers where these assets are produced) and exchanges (crypto exchange platforms) They have crippled the local ecosystem.
The AFP consulted with judicial sources on the number of farms and exchanges affected, without response so far.
“They are torpedoing mining. Find out what you have to find out, but why do they have to turn everything off?”Humberto Quevedo, director of the private National Association of Cryptocurrencies (ASONACRIP) and the specialized platform CryptoLand Venezuela, asked himself in dialogue with AFP, who calls for greater “transparency” on the part of the authorities.
“Do you have a problem and your solution is to grab a machine gun and kill everyone?” Quevedo questions.
The Superintendence of Cryptoactives is now under the control of an oversight board, but its office remains closed since Ramirez’s arrest. Even the silver metallic letters of the ‘SUNACRIP’ sign at the doors of the building in downtown Caracas were removed, AFP found.
Cryptocurrency use was high in Venezuela long before Maduro’s bet on the petro. These crypto assets 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 ‘cryptos‘, compared to 8.3% in the United States and 5% in the United Kingdom.
The mining of cryptocurrencies such as bitcoin proliferated in the last decade in Venezuela, driven by the low cost of energy needed for its production or ‘mined’, despite severe power supply problems. Persecuted at first, the government authorized it when it turned to crypto assets and fostered it with state mining farms.
SUNACRIP, created in 2018 by the Maduro government, granted operating licenses.
“All the people who tried to legalize their status (before SUNACRIP) are exposed,” Luis – a fictitious name to protect his identity – told AFP, who shut down two bitcoin mining farms in which he had some 500 machines. “Those who did it anonymously are better off”, he complains.
The case of Petro
“I eliminated the farms. It is absurd that they come and force you to turn off everything until further notice. All this returns us to a legal limbo,” he adds.
At the same time, the atmosphere has become even more rarefied in recent days due to the stoppage of transactions with petros, without explanations from the authorities. The use of this cryptocurrency has always been practically restricted to operations with the State.
“Suddenly and without warning” the chain of blocks of the petro, technology that allows registering operations in that cryptocurrency, “was paralyzed, making transactions impossible”indicated a statement released by the CryptoLand platform over the weekend.
The chain of blocks or “blockchain”, paralyzed since Wednesday, was reactivated briefly on Saturday, to then freeze again until Monday.
A probable system error in the quotes, that made it possible to acquire petros at prices well below the market, preceded the situation.
“Hopefully all derivative services and App (plications) will be reinstated little by little,” CryptoLand posted on Twitter.
Investors denounce that hundreds of petro user accounts were blocked on the digital platform of government social plans, which has not given explanations about what hpened.