Venezuela’s ‘Petro’ Cryptocurrency Raises $735 million in Pre-Sale

Nicolas Maduro, the President of Venezuela, has announced that the country’s petro cryptocurrency has raised $735 million in the first day of its pre-sale. Maduro announced during a state television address on February 20, 2018. Flanked by the country’s Vice President, Tareck El Aissami and Hugbel Roa, the country’s minister for Education, Science, and Technology, the President delivered a dig at the United States, saying that a cryptocurrency had been born that could take on “Superman.”

Controversial Cryptocurrency

In his address, the President did not give a breakdown of the investment figures nor did he provide evidence to back up the claims. Ever since the announcement of the plan to issue the petro, several experts have warned that the project was doomed to fail. The opposition-controlled legislature of the country also called the plan illegal and unconstitutional.

In January 2018, the U.S. Treasury Department issued a statement that said the issuance of the petro by President Maduro’s government could potentially be in violation of economic sanctions against the country and warned U.S. investors to stay away from the cryptocurrency. A Treasury spokesperson told Reuters on January 16, 2018, that:

“The petro digital currency would appear to be an extension of credit to the Venezuelan government [and] could therefore expose U.S. persons to legal risk. [It] is another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”

Despite the opposition to the plan, there was no stopping President Maduro and his economic team as the petro went on pre-sale on February 20, 2018. The website of the petro has even published a guide that provides detailed steps on how to set up a wallet to store the petro.

The government released no further details on the percentage of the 100 million tokens that would be sold during the pre-sale, government crypto advisers had earlier suggested a pre-sale percentage of 38.4 percent of the tokens. The public sale of the petro is expected to come up in March 2018.

A Country in Economic Turmoil

Venezuela as a country has been experiencing dire economic hardship caused by hyperinflation and stifling international sanctions. Since the decline in oil prices, the state has been unable to finance its mounting debt profile, and this has led to a massive devaluation of the bolivar, the country’s national currency.

The move to issue the petro cryptocurrency is seen as a plan to circumvent United States-led sanctions and revive the country’s collapsing economy. Since the announcement was made in December 2017, President Maduro has been optimistic about the viability of the plan. He has on several occasions expressed hope that the petro will help to stem the tide of the economic tailspin currently bedeviling the country.

Speaking earlier in the month, Carlos Vargas, the head of country’s Cryptocurrency Superintendency, said that the government was expecting investments in the petro from Qatar, Turkey, Europe, the United States. With regard to Qatar, Vargas had led a high-level delegation to the Gulf Nation in January to hold talks with the country’s government about investing in the petro.

The total supply of the petro is capped at 100 million tokens with each token being backed by a barrel of oil, thus, bringing the total value of the cryptocurrency to over $6 billion. The petro is also backed by the country’s gold, diamond, and natural gas reserves.

While the President appears to have deemed the first day of the pre-sale a success, the process was not without its hitches. In a series of tweets by Alejandro Machado, through his twitter account @alecmacgo, he detailed a number of irregularities with the pre-sale.

The tweets also reveal several issues with the website as the procedure was a little difficult to follow. There were also reports of poor customer service from the token website. Controversy trailed the pre-sale of the token as more reports circulated of bitcoin miners being kidnapped and assaulted by state authorities.

A number of inconsistencies and unsubstantiated claims by the government also emerged with the declaration by the President that a deal had been struck with Aerotrading, a notable blockchain firm.

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