US seizes Maduro’s plane as oil-backed crypto scam collapses

Two days ago, the US Department of Justice announced that it had seized Venezuelan President Nicolas Maduro’s Falcon 900EX jet, citing a possible violation of US export control and sanctions laws. Washington claims the plane was purchased illegally for $13 million and was purchased through a shell company in the Caribbean. The seizure of the plane is an ironic twist in crypto schemes by Maduro, who has previously declared it legal to purchase jet fuel using Venezuela’s controversial oil-backed cryptocurrency, the petro.

Six years ago, Maduro unveiled the infamous petro cryptocurrency under the so-called PdVSA-Crypto scheme. With Caracas strangled by Washington’s economic sanctions, Maduro launched the Petro as a last-ditch effort to raise cash, vowing that the Petro would “enable new forms of international financing.” The embattled president revealed that 100 million Petro tokens worth about $6 billion will be issued. The petro was supposed to be backed by Venezuela’s vast oil reserves, prompting the Venezuelan parliament to label it an illegal attempt to mortgage the country’s oil. Not to be confused with Signal Capital Management’s relaunched (and genuine) crypto, PetroDollar (XPD), Venezuela’s crypto-petro was valued at $60, or 3,600 sovereign bolivars, each. As part of the commodity-backed cryptos, Petro was probably doomed to fail, mainly due to trust issues. While Venezuela is home to the world’s largest oil reserves, few believed Maduro’s government would keep its word and actually maintain the reserves needed to support oil.

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Therefore, it was no surprise when crypto-petro was shattered in January 2024 and all holdings were liquidated amid bad adoption and corruption scandals. Petro’s darkest hour came after officials from PDVSA, the state oil company, sold shipments of crude oil and received payments of up to $20 billion in cryptocurrencies and other fiat currencies channeled through Sunacrip, the national body cryptocurrency watchdog. However, these funds were never reported to the national treasury. This led to the arrest of former PDVSA president Tareck El Aissami and former Sunacrip head Joselit Ramirez. In addition, Sunacrip had to enter a restructuring period over a year ago. But Venezuela’s crypto crisis didn’t end there. In May, the National Ministry of Energy confiscated more than 17,000 mining machines in an attempt to reduce energy consumption as the country experienced constant blackouts, forcing hundreds of cryptominers to pull the plug on operations.

Sanctions on Venezuela will continue

The seizure of Maduro’s plane comes just two months after the US Office of Foreign Assets Control (OFAC) eased some sanctions against Venezuela but kept sanctions against the PdVSA. OFAC has issued a new license allowing certain transactions related to the export or re-export of liquefied petroleum gas (LPG) to Venezuela until July 8, 2025. However, transactions with state-owned oil and natural gas company Petróleos de Venezuela, SA Venezuela company in which PdVSA holds a share of 50 percent or more, remain prohibited under the sanctions imposed by various executive orders. The previous general license allowed transactions related to operations in Venezuela’s oil or gas sector, but it expired on April 18. At the time, Washington’s position was that Venezuelan President Nicolas Maduro and his representatives had not fully fulfilled their obligations under the electoral roadmap signed with the opposition in Barbados in October 2023.

Well, that was before Venezuela’s disastrous presidential election, which means it’s highly unlikely that the US will impose oil sanctions on Venezuela anytime soon.

In last month’s election, Maduro and his proxies rigged the election results, falsely claimed victory and carried out widespread repression to maintain power. Washington acknowledges that opposition contender Edmundo González Urrutia received the most votes, noting that the Maduro-controlled National Electoral Council (CNE) failed to back up its announced results by producing original tally sheets, as it did after the 2013 and 2018 elections, despite repeated appeals. from Venezuelans and from the international community. A Venezuelan judge even issued an arrest warrant for Gonzalez, 75, a former diplomat, for failing to appear three times to answer questions about charges including conspiracy and forgery in related to elections.

The sanctions have been adverse to Venezuela’s oil sector: Venezuela’s crude production has fallen sharply from 3.2 million b/d in 2000 to 735,000 b/d today, mainly due to export restrictions and poor maintenance. Instead, crude oil production in neighboring Argentina has surged, with libertarian President Milei vowing to shake up the system.

By Alex Kimani for Oilprice.com

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