Corruption scandal shakes cryptocurrency ecosystem in Venezuela

A case of corruption has brought down the Venezuelan cryptocurrency system . Even the official currency, the petro, does not accept any operations on its blockchain.

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 Nicolás Maduro bet heavily on crypto assets as a way to circumvent the financial sanctions of the United States against Venezuela , and even launched a state cryptocurrency, the petro , in 2018 .

Things, however, took a turn: the state National Superintendence of Cryptoactives (SUNACRIP) became entangled in a corruption scandal at PDVSA and other state companies and institutions. The plot has left dozens of officials detained and led to the resignation of the once powerful oil minister, Tareck El Aissami.

The case

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 Ramírez, 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) have paralyzed the local ecosystem.

“They are torpedoing mining. Find out what they 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 in a dialogue. 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 Superintendency of Cryptoactives is now under the control of an oversight board, but its headquarters have remained closed since Ramírez’s arrest. Even the silver metallic letters of the ‘SUNACRIP’ sign on the doors of the building in downtown Caracas were removed.

Cryptocurrency use was high in Venezuela long before Maduro’s bid for 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. .

Digital mining in “limbo”

The mining of cryptocurrencies such as bitcoin proliferated in the last decade in Venezuela , driven by the low cost of the energy necessary for its production or ‘mining’, 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,” says Luis -a fictitious name to protect his identity-, who shut down two bitcoin mining farms in which he had some 500 machines. “Those who did it anonymously are better off,” he complains.

“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.