Venezuela’s Petro Cryptocurrency Could Be a Scam: Reuters Special Report

Seven months after launching its oil-backed cryptocurrency, Venezuela’s government has produced little evidence that it actually exists. According to a new investigative report from Reuters, ‘petro’ and the oil barrels it is supposedly backed by are nowhere to be found.

Billions and Billions?

Reuters dispatched a team of reporters to Atapirire, an isolated savanna in the middle of Venezuela, to look for evidence of a booming oil industry. According to the leftist government of Nicolas Maduro, the tiny hamlet is brimming with five billion barrels of petroleum that will be used to back the petro cryptocurrency, which was launched in February.

“There is no sign of that petro here,” said homemaker Igdalia Diaz, as quoted by Reuters. After speaking with dozens of experts on cryptocurrency and oil-field valuations over a four-month period, Reuters said there was no evidence that the petro trade existed. The few people Reuters found who actually bought into petro gave conflicting views; one complained of being “scammed” while another said he received the tokens but blamed U.S. sanctions for hurting the cryptocurrency’s debut.

After visiting Venezuela’s Finance Ministry, where the Superintendence of Cryptoassets is supposedly housed, Reuters was told that it “does not yet have a physical presence here.” Reporters have been unable to get ahold of anyone involved in the petro, including the Industry Ministry.

Veneuzela is in the throes of a generational crisis after the oil-price collapse exposed the socialist government’s dismal central planning, lack of diversification and over-extended benefits program. Economic collapse, massive food shortages and hyper-inflation have made parts of Venezuela practically inhabitable.

The petro was supposed to change all that by giving the government a source of revenue to boost the economy and circumnavigate U.S. sanctions.

Controversy Builds

Venezuela’s government has given conflicting reports about the petro. Back in March, the Maduro government claimed to have raised $5 billion via petro sales. However, Venezuelan cabinet minister Hugbel Roa told Reuters that the technology behind the petro is still being developed and that “nobody has been able to make use of the petro … nor have any resource s been received.”

What’s more, the petro has not turned up on any cryptocurrency exchange and is not accepted at any Venezuelan retailer. At the time of launch, one petro was pegged to one barrel of domestic oil priced at $60. However, without trading on any exchange, there’s no way to link prices to exchange rates or even determine the coin’s underlying value.

Questions over the petro’s existence come less than two weeks after the Central Bank of Venezuela linked the newly created “sovereign bolivar” to the cryptocurrency. The sovereign bolivar essentially re-bases the country’s fiat currency back 95% (roughly five zeros) following years of hyperinflation.  Following the oil-price collapse, Venezuela’s annual inflation rate surged to 108,000%.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi