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Venezuela Defies US Cryptocurrency Sanctions with Help from a Russian Bank

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The Petro (PTR), Venezuela’s oil-backed cryptocurrency, has been enduring thanks to the support offered by a Russian bank called Evrofinance Mosnarbank. This makes it the only financial institution willing to disregard and confront the sanctions put in place by the US against the South American nation.

As stated in an Associated Press briefing, the Evrofinance bank seems to have a lot to do with Petro’s launch. Early investors who registered with Venezuela’s government and downloaded the bespoke crypto wallet were invited to buy it by transferring a €1000 EUR minimum to a government-owned account at the aforementioned bank.

Russia’s involvement in the Petro affair

The reports also suggest that Venezuela’s launch of Petro was aided by the Russian government. Conspicuously, Evrofinance’s two biggest shareholders are two state-controlled Russian banks that have been sanctioned after Russia’s annexation of Crimea. The Venezuelan government is also said to have purchased somewhere around 49% stake back in 2011.

Russia’s involvement may be further shown as, in March, the Russian Association of Cryptocurrency and Blockchain awarded the Venezuelan government for its role in “challenging the de-facto powers of the international financial system.”

Russia and Venezuela fighting against US sanctions

According to the former head of the US Justice Department’s bank integrity unit, Claiborne W. Porter, the country is slowly impairing its external relations: “Like kids on the playground, Venezuela and Russia think they are fighting a common bully in U.S. sanctions, so they’re going to try and form a united front.”

Since the international relations between Russia and Venezuela with the US and EU alike are becoming more tense with each passing day, it’s no surprise that both countries are searching for practical ways to demonstrate political strength, hinting that the best way to do that is to move money outside the American financial system.

US sanctions and restrictions for Venezuela

This is not the first time Russia has aided Venezuela with debt reliefs over the years, as it is also one of the biggest investors in the country’s oil industry. Last year, the Trump administration banned Americans from lending money to Venezuela’s nearly bankrupt government and has also banned its citizens from buying the oil-backed Petro (PTR) in March this year.

The Venezuelan government is expected to have even more restrictions on its plate, as the US threatens to sanction the nation’s OPEC oil industry if Maduro goes ahead with the presidential election.

The current situation of Petro

At the current moment, it’s not yet clear just how many Petros the Venezuelan government has actually sold, but the country’s representative has bragged that $3.3 billion were raised in the pre-sale. The numbers seem to be a bit off, since so far only a small fraction of Petros have been distributed to buyers.

Rumors suggest that even offshore trading platforms like Bitfinex are refusing to work with Petro for fear of various violations. Financial experts seem to agree that only criminals and drug traffickers might be interested in Petro, as Alejandro Machado, a Venezuelan computer scientist states:

“An overwhelming majority of ICOs don’t deliver on what they promise because their promoters are outright scammers or fall short on technical expertise,” said Alejandro Machado, a Venezuelan-born computer scientist who refers for crypto startups. “In the case of the Venezuelan government, both reasons apply.

Maduro – not backing down

Even in the face of such adversity, Maduro is not intimidated as he continues to move Petros development forward. He even went as far as giving the Venezuelan state-owned institutions a 120-day limit to start accepting the oil-backed cryptocurrency as a legal tender in all transactions. He is also involved in the creation of 16 local exchanges where Venezuelans will be able to exchange their national currency for Petros. Reports also suggest that a second state-backed cryptocurrency tied to the country’s gold reserves is in the works.

The president of Russia’s blockchain group was keen on pointing out that the Kremlin is indeed keeping a close eye on the development of Petro, but nothing more than that. He also suggested that as long as the US keeps on punishing governments that challenge its financial policies, the incentive to discover alternative methods of finance will never vanish.

He ended by totally dismissing the idea that the cryptocurrency could be used to fund criminal activities. “That’s a fairy tale,” said Pripachkin. He also bluntly added: “The most popular currency for terrorists and criminals the world over is the U.S. dollar, not crypto, and nobody is suggesting we ban dollars. This is just an attempt to stop crypto from expanding.”

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