Troubles in Venezuela’s crypto ecosystem

Venezuela has been recently in the news in regards to crypto, and the news has not been good. It appears that the country’s crypto regulator, National Superintendency of Cryptoassets, or “Sunacrip” is dissatisfied with how the sector has grown, and has ordered all cryptocurrency exchanges registered in Venezuela in close.

The news comes soon after President Nicolas Maduro ordered the arrest of Venezuela’s Superintendent of Cryptoassets, Joselit Ramirez, and the restructuring of the nation’s crypto regulatory body.

Although the drastic action has not been officially confirmed, Venezuela’s National Association of Cryptocurrencies (Asonacrip) confirmed in interviews that it is happening as the nation moves forward with an anti-corruption investigation that has so far resulted in the heads being chopped off of Joselit Ramirez and Tareck el Aissami, the Minister of Energy and Petroleum, who serves as his political ally.

Has the tide turned?

In previous years, that included the crypto bull run beginning in 2020, President Maduro called for the promotion of cryptocurrencies as instruments to revitalize Venezuela’s economy.

The government legalized cryptocurrencies during this time, developed its own official cryptocurrency (The Petro), established mining regulations, institutionalized the registration of cryptocurrency exchanges, and started working to lessen the persecution of traders and miners who were perceived as participants in the black market for currencies.

Venezuela was thus being given as an example as ahow regulation can put the country at the forefront of the cryptocurrency revolution and this was believed my many to signify the heralding of a new era. The latest course of events, unfortunately, shows a 180-degree shift.

Asonacrip Provides Further Details

According to Jose Angel Alvarez, president of Venezuela’s National Association of Cryptocurrencies (Asonacrip),

We believe that private companies should not be held accountable for what is taking place inside the regulatory body and that we should promote the full activation of all cryptocurrency operations (in the country).

“We are putting up a list of suggestions to be delivered soon to Sunacrip and Dr. Anabel Pereira”. Alvarez continued. “Sunacrip has a new leader in Anabel Pereira.”

To get feedback on the proposals that will be sent to the Sunacrip intervention board, Asonacrip conducted a public survey for cryptocurrency fans in Venezuela.

It was also revealed shortly before the raid that Sunacrip had also ordered the termination of sizable bitcoin mining operations running in numerous states of Venezuela.

In fact, all the farms in the state of Carabobo were instructed to cease operations at the beginning of the week, which worries us as a community because some of our affiliates are being impacted by the decision, according to Alvarez.

#URGENTE nos confirman que apagaron todas las granjas permisadas y con licencia del Estado Lara. Recordemos que estas empresas pagan mes a mes impuestos y generan empleos. Hacemos llamado a @sunacrip_ve para la pronta reactivacion.

— Asonacrip (Asociación Nacional de Criptomonedas) (@AsonacripVe) March 24, 2023

Asonacrip has thus far confirmed the closure of mining farms in the states of Bolvar, Carabobo, and Lara.

The association demanded a reconsideration of these measures, noting that most mining farms were operating and in compliance with all legal requirements. Despite a crisis at the superintendency, Alvarez said in an interview that,

We think it should not affect the operations of all affiliated farms at the regional level.

Cryptocurrency Oil Scheme Corruption Uncovered

Just a few days ago, another crypto related scandal was in the news: a Venezuelan anti-corruption probe into an oil plan involving cryptocurrencies has resulted in the detention of 11 more people and the arrest of 21 businessmen and government officials.

According to Tarek William Saab, the attorney general of Venezuela, the alleged conspiracy involves selling the nation’s oil through the country’s cryptocurrency oversight organization in association with Petróleos de Venezuela SA (PDVSA), the state-owned oil and natural gas corporation.

The judiciary, PDVSA, and Sunacrip are the focus of the investigation, which was launched in October of last year. 10 government officials and 11 businessmen were detained as a result.

In addition, the authorities issued arrest warrants for 11 other people who were allegedly complicit in the oil fraud.

The attorney general stated that Sunacrip was aware of the selling oil cargoes for sale but lacked administrative supervision, allowing receivers to buy cargoes without making any payments or recognized ones. The attorney general did not disclose the names of the companies or the specifics of the purported plan.

Regarding possible corruption in the government and Sunacrip, social media has been rife with claims of irregularities, including high-ranking government officials owning bitcoin mining operations, influence peddling, arbitrary detentions, and equipment seizures.

At a press conference last week, the attorney general said,

We are talking about one of the most lurid plots in recent years, which involves officials, businessmen who benefited from corruption, and young people – including the so-called mafia women – who participated in corruption and money laundering.

Saab claimed that the crypto oversight organization signed contracts for putting crude on ships “without any type of administrative control or guarantees,” which was against the law. The state oil corporation “was not paid the corresponding payments” when the oil was marketed, he revealed.

He also said that Sunacrip had identified the issues with oil cargoes for sale but lacked administrative supervision, and thus the scheme allowed receivers to buy cargoes without making any payments or recognized ones. The attorney general did not disclose the names of the companies or the specifics of the purported plan.

Additionally, he disclosed that 10 officials had been detained, including Hugbel Roa, the former minister of food, Col. Antonio Pérez Suárez, the vice president of trade and quality supply at PDVSA, and Joselit Ramrez, the national superintendent of cryptocurrency.

The investigation of more than 31 oil corruption cases by Saab’s office resulted in the indictment of nearly 200 people, the arrest of several government officials and businessmen, and the expulsion of others.

Several days before to the attorney general’s declaration, Venezuela’s longtime oil minister Tareck El Aissami submitted his resignation due to suspicions of corruption against a few of his close friends.

El Aissami gave his resignation as “accompanying and fully supporting” the current investigation being carried out by the attorney general’s office, he said. Known to be one of Venezuelan President Nicolas Maduro’s loyal ministers, the former oil minister is not currently being prosecuted.

Cryptobuyer Venezuela Disputes the Claims

Eleazar Colmenares, the CEO of Cryptobuyer Venezuela, claimed that reports that Sunacrip had directed the shutdown of cryptocurrency exchange platforms in the nation were false. He posted a video that on March 24.

Colmenares said in a statement obtained by Globovisión news that “we want to clarify that the announcement made yesterday on our social media refers to the temporary non-operation of our crypto-fiat gateway service due to the transition process carried out by the competent authorities.” He also stressed that “the Sunacrip has not ordered the cessation of any Venezuelan exchange’s operations.”

Colmenares’ clarification relates to a statement they made where they stressed that “our platforms will not be operational temporarily” in order to “comply with orders issued by our regulatory entity on crypto assets Sunacrip.”

⚠️¡ATENCIÓN! Información de interés.⚠️

Estimados Cryptobuyers, les hacemos llegar el siguiente comunicado.#CryptobuyerVenezuela sigue trabajando en pro del desarrollo del ecosistema cripto en #Venezuela. pic.twitter.com/afLf0jrHyc

— Cryptobuyer Venezuela (@cryptoB_latam) March 23, 2023

However, Sunacrip has yet to issue a formal statement to dispel the uncertainty or lay out a timeline for the changes involving cryptocurrency users, dealers, miners, and exchanges.  It appears that the measures may be temporary, according to statements made by Venezuelan attorney Ana Ojeda Caracas. In any case, Sunacrip’s and other government bodies’ lack of transparency does not bode well for confidence in Venezuela’s crypto sector.

Investors and crypto enthusiasts may be right to think that a tough lesson might have been learned: in countries where government corruption runs rampant, the best of efforts at creating a ‘clean’ crypto ecosystem are fraught with dangers and uncertainties.

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