As with any technology, people can use cryptocurrencies for both good and bad things. The despot Venezuelan President Nicolás Maduro certainly became a face for the latter category upon unveiling a national crypto, the Petro, back in December 2017.
That asset, which Maduro said would be backed by oil, was launched to prop up his corrupt and challenged regime. Ever since then, the rogue president has leaned on the Petro project to try and mitigate his administration’s increasingly isolated position in the world.
Ironically though, the more the strongman Maduro has turned toward crypto for liberation, the harder that America’s leadership has focused on generally stifling him.
To date, that stifling has mainly come in the form of biting economic sanctions. Yet this week the U.S. Department of Justice (DOJ) threw a new series of indictments at Maduro and more than a dozen of his colleagues, alleging the officials had overseen a vast narco-terrorism scheme and at times resorted to crypto to try and hide their financial activities.
Maduro Can Use Crypto to Run, But Not Hide
On Thursday, March 26th, the DOJ announced an array of charges against Maduro and 14 of his top ministers oversaw a major, 20-year-old drug trafficking ring that the officials wanted to use to flood the U.S. with large amounts of cocaine.
Those indictments, which ranged from counts of narco-terrorism to corruption, resulted from considerable investigatory efforts by top U.S. government bodies like the Drug Enforcement Administration (DEA) and the Homeland Security Investigations (HSI) unit.
Per the DOJ, Maduro and his colleagues had even used Colombian FARC revolutionaries to aid with the cocaine trafficking and had more recently resorted to cryptocurrency — presumably the Petro or one or both of the top public cryptos, bitcoin (BTC) and ether (ETH) — to facilitate and obscure commerce related to the scheme.
The new indictments show America’s top law enforcement investigators can aggressively pursue these kinds of complex transnational schemes, said HSI Acting Executive Associate Director Alysa D. Erichs:
“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.”
Notably, Maduro’s top cryptocurrency superintendent, Joselit Camacho, was also hit with a separate series of charges in U.S. federal court on March 26th.
The Petro cryptocurrency has been shrouded by a lack of information since its official launch in 2018. Part of the digital currency’s mystery pertains to what it’s actually backed by.
At its launch, President Maduro said the asset would be backed by 5 billion barrels’ worth of oil that, at the time, hadn’t yet been retrieved from Venezuela’s domestic crude reserves. Those 5 billion barrels never showed up, but in November 2019 Maduro doubled down by saying he had a much smaller amount — 30 million barrels — lined up for the Petro:
“I will deliver these 30 million of barrels as a liquid, physical, material backing for the petro … The inventories of crude and products in storage tanks are available for immediate commercialization … to sustain and back the operations of the sovereign Venezuelan crypto-asset, the petro.”
A few weeks prior to those remarks, news broke that Venezuela’s central bank was studying how it might go about counting BTC and ETH toward its foreign reserves, a development that suggested those large public cryptocurrencies were vastly more useful than the Petro, which has been a dud domestically and internationally to date.
Including crypto as foreign reserves has never been done before on the world stage, but Maduro would only care to insofar as it could consolidate his economic position.