venezuela - Pwim.Net

Venezuelans Will Love Bitcoin Even More with 10,000,000% Inflation

Bitcoin’s trading volume has set a record high in Venezuela, thanks to the 10,000,000% inflation rate in 2019 as shown in Statista.

Source: Coin.dance

The data shows Bitcoin’s trading activity in P2P exchanges LocalBitcoins, Paxful and Bisq from Coin.dance. Bitcoin’s trading volume in LocalBitcoins hit a record high of 57 million bolivars on 20 July, beating the previous high of 49 million on 13 July. Venezuela’s inflation rate in 2018 was 929,789.5%, and the projected Venezuelan inflation rate from 2019 to 2024 will be at least 10 times higher. With the weakening of Venezuelan Bolivar, citizens turned to hold Bitcoin as alternate storage of value. Despite President Maduro’s urge towards the Bank of Venezuela to trade Petro crypto nationwide, the adoption of Petro remained poor and Venezuelans appreciate Bitcoin much more than the country-issued crypto.

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Venezuela’s Central Bank Considers the Potential of Bitcoin and Ethereum

Anonymous sources have offered direct insights into the Venezuelan’s Central Bank’s consideration of adopting Bitcoin (BTC) and Ether (ETH) payment systems.

According to an article by Bloomberg, the central bank of Venezuela is open to potentially storing cryptocurrencies. At the heart of the issue is the difficulty experienced in receiving payments from international clients to state-run and oil gas company: Petroleos de Venezuela S.A. (PSDV). Adding to the transactional difficulties are the US imposed sanctions against Venezuelan President Nicolas Maduro’s current regime.

Several other sources have also said that PSDV will implement transfers of Bitcoin and Ethereum to the Venezuelan central bank and then have the central institution repay suppliers in these cryptocurrencies. 

For the Venezuelan economy, tackling isolation from the global financial systems remains the biggest issue. As a result, Venezuela’s Central Bank is running internal tests to determine whether it can hold cryptocurrencies in its coffers that would equal the country’s international reserves, which are valued at a 30-year low of $7.9 billion.

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Venezuela to Offer Christmas Bonus in Petro Coin to Retirees and Pensioners

Since the launch of Petro, Venezuela’s cryptocurrency in February 2018, the government has been trying to expand its use case across almost every activity in the country. To this effect, a tweet from a local news outlet, Venepress, claimed that Venezuela Government would give its Christmas bonus to retirees and pensioners in its cryptocurrency, Petro.

Announced on Oct. 17, the tweet read that Nicholas Maduro, Venezuelan President, announced that the Christmas bonus this year would be in Petro. This is typically what happened the previous year when Venezuela automatically converted pensioners’ bonuses for the year into Petro.

This could be an affirmation of the words and beliefs of Francisco Torrealba, the Deputy of the National Constituent Assembly of Venezuela. According to him, a great change had come to Venezuela, and their current president has had a significant contribution towards this change by creating the Petro. He shared the faith that transactions will soon be done with the Petro, which means that all currencies will quickly be overridden and substituted by cryptocurrency.

In September 2019, according to a report on the government’s website, the same President, Nicolas Maduro, gave a mandate that the oil-backed Petro token must be used for funding the knowing social building initiative and constructing new homes under the Great Housing Mission Venezuela. Let us recall that the said project Maduro changed the payment option of the workers was set up by his predecessor, Hugo Chaves, in 2011.

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Venezuelan President Maduro Leveraged Cryptocurrency to Conceal Drug Ring Transactions According to US DOJ

The United States Department of Justice (DOJ) have alleged that Venezuelan President Nicolas Maduro leveraged crypto in illegal drug trade according to the March 26 indictment.Maduro along with 14 other high-ranking Venezuelan officials has been charged for his alleged involvement in a multibillion-dollar cocaine trafficking ring that the DOJ claimed wreaked havoc on American communities by flooding the markets with cocaine for over 20 years. The allegations extend to drug runners, Colombian cartels, and the overall corruption that has plagued Venezuala’s governance.“These indictments expose the devastating systemic corruption at the highest levels of Nicolas Maduro’s regime,” said DEA Acting Administrator Uttam Dhillon. “These officials repeatedly and knowingly betrayed the people of Venezuela, conspiring, for personal gain with drug traffickers and designated foreign terrorist organizations like FARC. Today’s actions send a clear message to corrupt officials everywhere that no one is above the law or beyond the reach of U.S. law enforcement.”Venezuela’s Crypto SuperintendentAccording to the announcement, Homeland Security Investigations (HSI) Acting Executive Associate Director Alysa D. Erichs said the Venezuelan officials had leveraged cryptocurrency in an attempt to mask their money trail on their alleged crimes.Per the release, “Today’s announcement highlights HSI’s global reach and commitment to aggressively identify, target and investigate individuals who violate U.S. laws, exploit financial systems and hide behind cryptocurrency to further their illicit criminal activity. Let this indictment be a reminder that no one is above the law – not even powerful political officials.While no specific cryptocurrency was named, Venezuela is known for the Petro cryptocurrency which is backed by oil. Notably the announcement also revealed that Venezuela’s crypto superintendent, Joselit Ramirez Camacho had also been indicted in a separate action in the Southern District of New York. Camacho is the head of Sunacrip – a regulating authority in Venezuela of Crypto assets heavily involved with the maintenance of the Petro.

Venezuelan President Nicolas Maduro Leverages Coronavirus Pandemic for National Petro Adoption

Venezuela’s president, Nicolas Maduro has announced a new campaign aiming to help the medical staff in his nation by airdropping one Petro to each actively working doctor amid the coronavirus pandemic.

The Venezuelan government is determined to take the coronavirus pandemic as an opportunity to boost the adoption of its national cryptocurrency in the country. The government announced this new campaign through its social media accounts, as a token of appreciation of efforts of the nation’s doctors to combat COVID-19.

The Patria System, introduced by the government, will be used to distribute the special bonus of a Petro for the “Doctors of the Motherland.” The platform was created to support the socio-economic conditions of the population and distribute subsidies and bonuses with its cryptographic token without going through the traditional banking system.

As a part of the measures to keep Venezuelan citizens safe, Maduro previously approved benefits for citizens who were unable to work due to self-isolation.

Venezuela crisis

According to an economist for the American Institute for Economic Research, Venezuela’s Petro could help stimulate the country’s economy. William Luther, the director of the Sound Money Project of the American Institute for Economic Research believes that while it might marginally improve the country’s economy, there may be consequences of strengthening an authoritarian regime.

Venezuelan hospitals have been reportedly ill-equipped to cope with the coronavirus pandemic. At the Caracas University Hospital, soap and disinfectants have been described as “luxuries,” and the facility has been facing shortages of personal protective equipment, signaling that Maduro could have supported Venezuelan hospitals directly, rather than boosting the adoption of its crypto system.

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Venezuelans to Bypass Hyperinflation with Bitcoin-Backed Synthetic US Dollars After Years of Extreme Economic Crisis

A cross-border remittance startup based in Colombia, Valiu has released a new Bitcoin-backed US dollars for Venezuelans to bypass the hyperinflation that has been tormenting their national economy.

To tackle the Venezuelan inflation, Valiu has partnered with a Colombian food delivery app, Rappi, to offer a larger user base to help with adoption when it is fully launched later this year.

Valiu will be launching synthetic Bitcoin-backed US dollars stored and available through a smartphone wallet application, which could be sent between Venezuelans without any fees. These synthetic US dollars are backed by Bitcoin, and users will be able to use this ‘cryptodollar’ without any prior knowledge of any crypto news, blockchain news or understanding of crypto payments or Bitcoin price. Venezuelans can simply deposit cash at Valiu’s accessible remittance partners in Colombia and buy and transfer cryptodollars.

Venezuela crisis: The emergence of the Petro crypto

Venezuela’s inflation started in November 2016, due to the country’s ongoing socio-economic and political crisis. The Venezuela inflation rate reached 800 percent in 2016, over 4,000 percent in 2017, and 1,700,000 percent in 2018. The Central Bank of Venezuela, Banco de Venezuela (BCV) estimated that the inflation rate increased to 53,798,500% between 2016 to April 2019. The International Monetary Fund (IMF) also estimated that the inflation rate would reach 10,000,000 by the end of 2019. As of 2014, Venezuela’s GDP was 482.4 billion.

The country’s President Nicolas Maduro announced in December 2017 that Venezuela will issue a state-backed cryptocurrency, also known as the ‘Petro’ in an attempt to get the country back on its feet. Due to the falling value of the Venezuela currency, the Venezuelan bolivar, the Petro would be backed by oil, gasoline, gold, and diamonds from Venezuela’s reserves. US President Trump prohibited transactions in any Venezuelan government-issued cryptocurrency including the Petro by any American citizen or person in the US, back in March 2018. This was due to the allegations of the cryptocurrency being used to evade US sanctions.

Could the cryptodollar be a solution to hyperinflation?

The inspiration behind the cryptodollar was the inflow of Venezuelan migrant workers into Colombia. Popular remittance companies including Western Union and Moneygram have been increasingly subject to capital controls, therefore many Venezuelans have heard the news and turned to the black market for remittances.

Although the Colombian startup has already been offering fiat-based remittances to Venezuela’s citizens for over half a year, recipients of the remittances have ended up with fewer bolivars during the time it took to arrive. The startup further stated that due to the coronavirus pandemic, dollars cash hardly make it across borders during the COVID-19 lockdown.

Venezuelan President Nicolas Maduro still keen on Petro adoption

Blockchain.News previously reported that Venezuela’s president, Nicolas Maduro has announced a new campaign aiming to help the medical staff in his nation by airdropping one Petro to each actively working doctor amid the coronavirus pandemic.

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US Government Offers $5 Million Reward for the Arrest of Venezuela’s Head of Petro Cryptocurrency

US Immigration and Customs Enforcement (ICE), a division of the Department of Homeland Security, has added Joselit Ramirez to its most wanted person’s list. Ramirez is a public official and currently he is Venezuela’s superintendent of cryptocurrency Petro, the country’s oil-backed cryptocurrency.

Unresolved case

The report shows that Ramirez is wanted by the US government over allegations of corruption, links to the narcotics trade, and other crimes. The ICE accuses him for multiple violations associated with international commerce and his alleged involvement in the international drug trafficking scene.

The ICE wants the superintendent for violation of the Kingpin Act, the International Emergency Economic Powers Act, and for breaking multiple sanctions imposed by the US Treasury Department’s Office of Foreign Asset Control (OFAC).

Now, the US government is offering a $5 million reward to anyone who can provide information leading to the conviction or arrest of Ramirez. The ICE says that Ramirez has deep economic, social, and political ties to numerous alleged narcotics kingpins. Ramirez is also wanted for sanction evasion and money laundering.

The move comes the same day when Venezuela’s government has started accepting the similar sanctioned Petro crypto for gasoline purchases. Last week, Venezuela obtained many shipments of gasoline from Iran, evading sanctions imposed by the US.

Ramirez has been serving as the head of Venezuela’s cryptocurrency agency since June 2018. Carlos Vargas was his predecessor, an opposition leader, and a famous congressman who later worked with the Nicolas Maduro administration during the development of the Petro.

In March 2020, the district attorney of New York, Geoffrey Barman, accused Ramirez of being part of a corrupt group of high-profile Venezuela officials, including President Nicolas Madura, for running a narco-terrorism partnership that aims to flood the US with cocaine so that to undermine the wellbeing and health of the United States.

Venezuela journalist Marbellis posted a photo of Ramirez on twitter in which he seemed to be working from his office and apparently appeared unaffected by the ICE announcement.

If Ramirez is arrested, then he will be sent to the United States and tried in the Southern District of New York.

Venezuelans to bypass hyperinflation with Bitcoin-backed synthetic US Dollars after years of extreme economic crisis

Venezuela launched its Petro cryptocurrency backed by mineral reserves and oil in 2018 as the nation was facing harsh sanctions imposed by the US and seeing a plummeting Venezuela currency (Bolivar).

The controversial Venezuelan government has even forced its citizens to use Petro. The nation recently announced that all petrol stations across the nation will sell fuel at reduced prices in exchange for Petro cryptocurrency from customers. But the cryptocurrency was not supported or embraced wholeheartedly by the global community. Even local investors are skeptical about Petro cryptocurrency.

However, the Venezuelan government is trying to develop its own mainstream digital currencies to revive its failing economy. Last year, the government initiated a testing initiative to examine whether it can hold cryptocurrencies in its national reserves.

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Venezuela Wants Citizens to Pay Taxes in State-Issued Petro Cryptocurrency

Venezuela is moving on a mandate that could see taxes being collected using its state-issued cryptocurrency—the oil-backed Petro. The effort is part of a nation-wide campaign to create mainstream use cases for Venezuela’s cryptocurrency.

In Venezuela, the Bolivarian Council of Mayors has signed off on the “National Tax Harmonization Agreement” which is a campaign to mandate the use of Petro cryptocurrency in tax collection and payments.

According to the announcement, an overwhelming majority of 305 mayors and municipality representatives have voted for the new crypto tax collection mechanism, with 30 mayors opting for fiat-based tax collection.

The campaign is being led by Venezuela’s Vice President Delcy Rodriguez who also leads the implementation of a new information exchange and monitoring system to allow companies to pay their taxes using the state-issued cryptocurrency.

Rodriguez said, “It is the simplification of procedures, making the State’s administrative activity at the service of the people more efficient, of the economic sectors that stimulate economic activity.”

Venezuelan Push For Petro Adoption and Usage

Over the last few years, Venezuela has been combating hyperinflation which has put the nation under extreme economic duress.

Since 2018, the Venezuelan administration of President Nicolas Maduro has used every opportunity to boost the adoption of its national oil- backed Petro cryptocurrency to circumvent the hyperinflation, even leveraging the COVID pandemic crisis to further airdrop the currency to doctors in the nation.

In addition, the Venezuelan government is accepting passport payments with the Petro and its oil companies are also seeking payment in the state-backed cryptocurrency. The country reported that 15 percent of all fuel payments in the country were now utilizing Petro.

Corruption and Sanctions

Venezuela is still facing harsh sanctions from the global community, particularly the United States for allegations of deep corruption in the South American nation’s government. In March 2020, the United States Department of Justice (DOJ) alleged that Venezuelan President Nicolas Maduro leveraged crypto in the illegal drug trade.

Maduro along with 14 other high-ranking Venezuelan officials was been charged for his alleged involvement in a multibillion-dollar cocaine trafficking ring that the DOJ claimed wreaked havoc on American communities by flooding the markets with cocaine for over 20 years. The allegations extend to drug runners, Colombian cartels, and the overall corruption that has plagued Venezuala’s governance.

“These indictments expose the devastating systemic corruption at the highest levels of Nicolas Maduro’s regime,” said DEA Acting Administrator Uttam Dhillon. “These officials repeatedly and knowingly betrayed the people of Venezuela, conspiring, for personal gain with drug traffickers and designated foreign terrorist organizations like FARC. These enforcement actions send a clear message to corrupt officials everywhere that no one is above the law or beyond the reach of US law enforcement.”

Chainalysis: Venezuela’s State-Owned Crypto Exchange Possibly Used by Maduro Regime to Launder Funds

Venezuela has been witnessing one of the worst economic crises ever seen, with its currency, the Bolivar going through hyperinflation and becoming almost worthless last year. The Venezuelan inflation has been tormenting its citizens, and Venezuelans have no choice but to turn to cryptocurrencies.

The Venezuelan government, led by its president Nicolas Madura has previously leveraged the coronavirus pandemic to encourage the adoption of its cryptocurrency, Petro. Venezuela’s state-backed cryptocurrency, the Petro, was created in an attempt to get the country back on its feet after suffering through hyperinflation.

The Petero was claimed to mitigate poor economic conditions for Venezuelans. However, US President Trump started to prohibit transactions in any Venezuelan government-issued cryptocurrency, including the Petro by any American citizen or person in the US. This was due to the allegations of the cryptocurrency being used to evade US sanctions. Nicolas Maduro is OFAC-sanctioned due to corruption and human rights abuses.

Blockchain analysis company Chainalysis wanted to find out whether the claims of whether Petro aiding Venezuelans are true and the growth and adoption of cryptocurrencies in the struggling economy.

Digging into the data from financial intelligence service Sayari, Chainalysis pointed out that Criptolago, a Venezuelan state-owned cryptocurrency exchange is not actually helping struggling Venezuelans.

An average Venezuelan earns 72 cents a day. Chainalysis highlighted that more than 75 percent of transfer volume is moved in transactions of over $1,000 of cryptocurrency in Criptolago. Most of the average-wage earning Venezuelans could afford these transfers. Instead, Chainalysis spoke with an expert who suggested that:

“Criptolago’s transaction activity suggests the platform may be used primarily by individuals connected to the Maduro regime seeking to launder funds or move them out of Venezuela.”

On Chainalysis’ Geographic Crypto Usage Index, Venezuela ranked third with a high score of 0.8 on a scale of 0 to 1. Venezuela also ranks third for peer-to-peer trading volume in US dollars, after the US and Russia.

Most of the cryptocurrency activity is driven by peer-to-peer (P2P) exchange activity, with the most being on LocalBitcoins. Venezuela is also the third-most active country on LocalBitcoins, and the second-most active when taken into consideration of the number of internet users and purchasing power parity per capita.

While Chainalysis suggested that the P2P usage does have a correlation with periods of hyperinflation in Venezuela, it could also be due to hyperinflation itself—where more bolivars would be needed to purchase the same amount of Bitcoin. The blockchain analysis firm also interviewed with cryptocurrency experts in Latin America and concluded that Venezuela has become increasingly interested in cryptocurrency.

Why Did Venezuela Block Citizens’ Access to Coinbase Crypto Exchange?

President Nicolas Maduro’s administration is denying the citizens of Venezuela access to United States crypto exchange Coinbase as well as fiat remittance platform MercaDolar according to a local digital rights advocacy group.

According to digital rights group Venezuela Inteligente, internet service providers (ISPs) in Venezuela have blocked Coinbase and MercaDolar under the instruction of President Nicolas Maduro’s government.

According to the Tweet by Inteligente on Sept 9, the move to block the exchange platforms was discovered late on Sept. 8 and the objective of the Maduro administration is unclear as only these two exchanges were singled out in Venezuela while the majority of exchanges are still accessible.

The Director of Venezuela Inteligente Andres E. Azpurua said, “Venezuela has a history of blocking exchange platforms […] Especially those used to exchange local currency for foreign currency.”

Why was Coinbase Singled Out?

The political climate in Venezuela is reaching a boiling point as the country continues to battle the corruption of the Maduro administration.

Juan Guaido is the self-proclaimed interim President of Venezuela and is fast being recognized as the official leader of the country.

Image: Interim President Juan Guaido

According to Reuters, President Juan Guaido on Monday announced a “unitary pact” supported by a coalition of parties calling for increased international pressure on President Nicolas Maduro as the country heads toward a congressional election in December.

Inteligente Director, Azpurua believes that attempts at capital controls over who receives what type of funding in a politically charged climate could be one of the main reasons for the recent ISP blocks of Coinbase and MercaDolar.

On August 20, Coinbase-backed Airtm, well-known for being a censorship-resistant P2P exchange was appointed to redistribute $18 million seized by US authorities to 62,000 healthcare workers.

President Juan Guaido quickly outlined his own plans for helping to return the seized funds to the country’s healthcare workers, however Maduro’s government swiftly blocked Airtm to Venezuelan citizens.

While Maduro has lost almost all credibility on the global stage and in the eyes of his citizens, his response to these measure indicates he is not ready to handover power to his opponent Guaido just yet.