Last year, President of Venezuela Nicolas Maduro launched the country’s very own oil-backed cryptocurrency called Petro coin. And last month, in its opening sale, he claimed that it raised about $750 million for which there is no official proof.
Given Venezuela’s economic condition that is going through a crisis which is only deteriorating over the time coupled with the sanctions laid by the US on this country, raises the hackles of investors.
Subsequently, there are numerous other reasons as to why you shouldn’t think of investing in this cryptocurrency.
Venezuela is under the dictatorship
Since 1999, Venezuela is going through a communist dictatorship that has affected the infrastructure and the entire economy of the country. From the scarcity of food and medicine to increasing crime rates and the collapse of health and public system, their economy is simply ruined.
Moreover, the US government along with other international communities, have further enforced sanctions on Venezuela. Amidst this dire political and financial situation, Petro is Maduro’s attempt to leverage the cryptocurrency market to evade these imposed sanctions.
Petro coin lacks clarity on claims & blockchain transition
One of the most pressing issue with the launch and initial fundraising of this cryptocurrency is there has been no evidence of the claims made by Maduro. Moreover, the white paper of Venezuela crypto petro that was released on 31 January doesn’t talk anything about it being backed or related to oil.
Initially, it has been stated that this cryptocurrency is based on the ethereum blockchain. Then, later on, it has been revealed that the coin will be based on NEM blockchain as per the buyers manual, that too without any explanation for making the change.
Too much legal risk attached
The Venezuelan crypto Petro also runs the legal risk from the US government as the Department of State has already warned people of buying Petro. It has been stated that those who invest in Petro coin will also come under the risk of getting sanctioned by the department.
In a Senate Committee, the CFTC chairman Giancarlo said that his agency will be keeping a careful watch on Petro for any signs that might indicate that they are bypassing the imposed sanctions.
Also, in a statement published in January, talks about the executive order which is basically prohibited by an executive order and identifies that such currency would be taken as an extension of credit to the government of Venezuela.
Venezuela Petro coin can easily become a legal problem for its holders and the risks are too many. It just looks like a last-ditch attempt by the Venezuelan government to make some quick bucks.
What are your views on Venezuela’s “petro” cryptocurrency? Do you think it is worth investing? Share your thoughts with us by commenting below!
I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.