Venezuela Using Tether (USDT) to Evade United Stakes Oil Sanctions

Amid election chaos, PDVSA, a state-managed oil company, is utilizing USDT. However, Tether promises to adhere to the law and prohibit transactions.

Venezuela’s oil industry will be sanctioned again by the United States following a six-month hiatus. The economic effect has allegedly compelled the country to quicken the adoption of cryptocurrency in oil trading. 

As part of interventions to motivate Venezuela’s leaders to carry out a fair presidential election in July, the United States enforced General License 44, which approved transactions associated with gas or oil sector activities in the country. 

Nevertheless, the license is being annulled after Maria Corina Machado, an opposition candidate, was prevented from running by President Nicolas Maduro’s government. 

Venezuela Using Digital Currencies 

Amid the political chaos, PDVSA, the nation’s state-managed oil firm, intends to boost the utilization of digital currencies in its fuel and crude exports. Several sources mentioned by a news agency revealed that the move seeks to alleviate the risk of sale earnings being frozen in overseas bank accounts because of the reintroduced sanctions. 

President Maduro confirmed that Venezuela has utilized crypto for a long time. However, it is reported that this year, PDVSA shifted a number of oil deals to a contract structure that entailed prepayment for 50% of every cargo’s value in the USDT stablecoin, even during the sanctions’ halt.

The reintroduction of sanctions is quickening the shift. Besides, PDSA purportedly requires new clients carrying out oil transactions to hold cryptocurrency in a digital wallet. 

PDSA’s move might be influenced more by convenience compared to strategy. This is due to Tether, a blockchain platform underlying USDT, having past success in blocking crypto addresses recognized by law enforcement as owned by sanctioned persons. 

More vetos were imposed on April 26. The firm revealed to CryptoSlate that Tether respects the Office of Foreign Assets Control (OFAC) SDN list and is dedicated to ensuring prompt sanctioning of addresses. Dune Analytics shows that Tether has willingly blocked 1426 addresses, freezing funds amounting to more than $1B. 

Venezuela Project Called Off

In early 2018, Venezuela revealed plans to unveil a native cryptocurrency. The token was initially proposed to run on the Ethereum platform and is poised to be easily tradeable and censorship-resistant. 

Afterwards, the government shifted to a private blockchain. The United States later targeted and sanctioned it, averting its international adoption. 

The coin died this year following the end of a significant corruption scandal with the detention of the cryptocurrency superintended as well as the oil minister. The United States government is following the two for corruption charges.

During the hiatus, the country’s oil exports rose. According to the oil ministry, almost 1 million barrels are exported every day, the highest in four years. President Nicolas Maduro is still combative in the wake of the sanctions. In April 2022, he tweeted that despite blocks, threats, and sanctions, they will shift forward in Venezuela’s development and for citizens’ peace. 

The move towards cryptocurrency in oil trades is a major move for the nation as it aims to maintain its oil exports in the wake of external bans. Nevertheless, depending on intermediaries for transactions might lead to some oil earnings moving to PDVSA. 

Did Venezuela Conceal $21 Billion?

Venezuela’s latest corruption misconduct entailed $21B concealed from the government by PDVSA officials. In a TV broadcast, Nicolas Maduro noted that the executives had strategies to conceal the funds in crypto. Delinquents, traitors, and mafias utilized something developed for the good of a hideout. 

In the meantime, Pedro Tellechea, Venezuelan oil minister, claimed that during the 45-day- wind-down period set by the United States, the nation anticipates continuing to sign contracts as well as gas and crude project expansions. Later, Venezuela will request potential clients to ask for specific permits.