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Venezuela Had Russia’s Help in Launching Its Cryptocurrency

Russia doesn’t seem to be taking U.S. sanctions too seriously, guys.

In late February, Venezuela began offering the petro, the world’s first state-backed cryptocurrency, which is tied to the country’s oil reserves. As it turns out, however, Venezuela isn’t the only player involved in Petro: Russia is, too.

A new report by TIME found that the petro wasn’t just the brainchild of Venezuelan president Nicolás Maduro; rather, it is the result of a “half-hidden joint venture” between Venezuelan and Russian officials and businessmen.

The stated purpose of the cryptocurrency is to raise money for the Venezuelan government – President Maduro hopes to raise $6 billion from petro sales. But, according to sources, the real purpose is to help Russia skirt U.S. sanctions. An executive at a Russian state bank told TIME that the Kremlin was heavily involved in the development of the petro, and that Russian President Vladimir Putin personally signed off on the project.

Apparently, Russia had an idea to create a crypto version of the ruble, but economic advisers at Russia’s central bank warned that doing so might destabilize the value of the ruble itself. So, rather than take all the risk, Russia is using Venezuela as a guinea pig for their idea; if it’s successful, it will make it that much more difficult in the future to enforce sanctions on foreign countries.

In response, Treasury Secretary Steven Mnuchin released a statement:

President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis. Instead of correcting course to avoid further catastrophe, the Maduro regime is attempting to circumvent sanctions through the Petro digital currency — a ploy that Venezuela’s democratically-elected National Assembly has denounced and Treasury has cautioned US persons to avoid.

The Trump administration issued an executive order this week that prohibits U.S. citizens from purchasing the petro. As of this writing, the administration has offered no formal statement on Russia’s involvement.

[via The Verge]

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