Petro, the cryptocurrency launched by Venezuela’s Nicolas Maduro government, was the result of a hidden collaboration between officials and businessmen from the South American country and Russia, to evade the economic sanctions imposed by the United States, the Time magazine reported, citing sources familiar with the effort.
U.S. President Donald Trump on Monday had issued an executive order banning U.S. persons from using, purchasing and selling Venezuela’s digital currency, Petro.
The Trump administration had imposed additional sanctions on Venezuela in August 2017, citing the Maduro government’s policies, human rights violations and the deepening humanitarian crisis in the country, among others.
Maduro launched Petro, which is supposedly backed by Venezuela’s oil reserves, on February 20 amid lot of fanfare. The socialist leader claimed the cryptocurrency would help his government fight what he described “a U.S. conspiracy” to unsettle his government.
The Petro pre-sale raised $735 million in its first day, Maduro claimed. He plans to reap around $6 billion from the total sale.
However, Venezuela’s opposition-controlled parliament National Assembly objected to Petro, calling it unconstitutional and a fraud.
Time reported that two of Maduro’s Russian advisers, Denis Druzhkov and Fyodor Bogorodsky, who were present at the Petro launch ceremony, have ties to major Russian banks and billionaires close to the Kremlin.
Further, senior advisers to the Kremlin oversaw the Petro effort in Venezuela, which was signed off by President Vladimir Putin last year, Time reported on its website, citing a Russian state bank executive who deals with cryptocurrencies.
The Russian Finance Ministry denied involvement of any of the country’s financial authorities in the Petro’s creation, while there was no immediate response from the Venezuelan government, the report said.
Russia is betting on cryptocurrencies, which are usually off the radar of regulatory authorities, as one of the ways to end the U.S. hegemony in the global economy and financial system.
Cryptocurrencies are unlikely to help Russia much in this effort, save for some small disruptions, Brian O’Toole, one of the key figures behind US sanctions on Russia, told Time.
Russia has been showing interest in cryptocurrencies for long. The country even planned a digital version of ruble, but the idea was opposed by the central bank, which fears such a measure will destabilize the actual ruble.
Given such fears, Russia chose its ally Venezuela to carry out the experiment, the Time report said, citing the Russian state bank executive.
The Venezuelan economy has been in shatters for a long time, thanks mainly to the poor policies of the Maduro government that led to a severe recession. Faltering oil exports also exacerbated the situation.
The country’s inflation, the fastest in the world, exceeded 2,400 percent last year, and is expected to soar to around 13,000 percent this year, the International Monetary Fund predicted.
Amid the hyperinflation, the Venezuelan Bolivar lost most of its value last year and is expected to crash further.
Of Greater concern is the humanitarian crisis in Venezuela. Basic necessities such as food and medicine are beyond the reach of most people due to sky-high prices. Severe malnutrition is rampant among the children.
In a recent report, the Human Rights Watch cited official data for 2016 which showed that maternal mortality rose 65 percent and infant mortality increased 30 percent in one year.