Critics Allege Venezuelan President Maduro Will Use Crypto to Bypass Sanctions

Venezuelan political pundits and activists have warned that President Nicolas Maduro and his government are increasingly turning to cryptocurrency transactions as a way to evade international sanctions.

This follows the recent re-imposition of sanctions on gold and oil by the United States, after Maduro failed to respect an agreement to ensure fair elections scheduled for July.

Critics are calling for tougher penalties

For nearly two decades, the United States has imposed targeted sanctions on Venezuela, aiming to pressure the government to undertake democratic reforms. However, Andrew Furman, head of national security intelligence at Chainalysis, notes that sanctioned regimes like Maduro's often explore multiple ways to evade such restrictions.

Nicolas Maduro and his representatives have not fully fulfilled the commitments made under the electoral roadmap agreement. Therefore, General License 44 – which allowed transactions related to the oil and gas sector with Venezuela – will expire after midnight and will not be renewed.

– Matthew Miller (@StateDeptSpox) April 17, 2024

“When you talk about regimes that are under sanctions, they usually look for a variety of ways to evade those sanctions. The Venezuelan government and the Maduro regime have been doing this through a wide range of methods over the years,” Ferman told Bloomberg.

These concerns are detailed in A a report From the Woodrow Wilson International Center for Scholars, co-authored by Venezuelan dissident Leopoldo Lopez and Intel Solutions director Christopher Doucet. The report highlights loopholes in recent sanctions, particularly in the context of the Maduro regime's stated goal of leveraging cryptocurrency projects to bypass these international barriers.

In their report, Lopez and Doucet emphasize the economic impact of alleged cryptocurrency manipulation by the Maduro regime. “Every dollar embezzled by the Maduro regime belongs to the Venezuelan people,” they wrote.

“The billions that have disappeared in recent years represent an enormous sum, which could have been pivotal in revitalizing the country’s faltering economy. Instead, Maduro’s embrace of cryptocurrency has exploited the emerging technology to carve a new path to transforming the country’s wealth, further impoverishing its citizens.”

They call on the United States and the European Union to implement more comprehensive and stringent sanctions and urge other countries to investigate the Venezuelan government's use of cryptocurrencies to evade sanctions.

Chainalogy reveals $70 million in stablecoin transfers

Further blockchain analysis conducted by Chainalysis revealed that SUNACRIP, Venezuela's national supervisory authority for crypto assets and related activities, was actively transferring large amounts of tokens across different accounts within different cryptocurrency platforms.

Transactions tracked by Chainalysis indicated that over $70 million in stablecoins were processed through addresses likely operated by SUNACRIP or its affiliates, facilitating smoother financial operations despite the sanctions.

In 2018, the Venezuelan government introduced the petro, a cryptocurrency backed by the country's oil and mineral reserves, to combat hyperinflation and avoid US sanctions. Despite mandates for its use, the token has seen limited practical adoption. In January, the government suspended Petro amid a corruption investigation into embezzled payments meant for the state-run oil company, Petroleos de Venezuela SA.