Chainalysis Report Demonstrates Progressive Utilization of Cryptocurrency in Venezuela

Chainalysis, a blockchain analysis company, has issued a new report on the increase in usage of cryptocurrency in Venezuela.

By · Aug 31, 2020 . 7min read

Cryptocurrency in Venezuela

Chainalysis, a blockchain analysis company, has issued a new report called “Hyperinflation and Sanctions Evasion: What On-Chain Data Tells Us About Venezuelans’ Trust in Cryptocurrency.” The report describes how individuals close to the Maduro regime launder money via peer-to-peer (p2p) crypto trading platforms. The Venezuelan government’s potential to develop a cryptocurrency-centric economy seems to be working. However, the officials did not hope this.

The Venezuelan government, led by its president Nicolas Madura has previously leveraged the coronavirus pandemic to promote its cryptocurrency, Petro. Venezuela’s state-backed cryptocurrency, the Petro, was built to get the nation back on its feet after suffering through hyperinflation. The Petro alleges to alleviate poor economic conditions for Venezuelans. 

Nevertheless, U.S. President Trump began to halt transactions in any Venezuelan government-issued cryptocurrency, including the Petro. This was due to the allegations relating to utilization of cryptocurrency to circumvent U.S. sanctions. Nicolas Maduro is Office of Foreign Assets Control (OFAC)- sanctioned due to corruption and human rights abuses. Blockchain analysis company, Chainalysis aspired to find out whether the claims of Petro assisting Venezuelans are accurate. Moreover, is there growth and adoption of cryptocurrencies in the struggling economy. 

Venezuela’s Cryptocurrency Adoption

Venezuela is known as one of the most progressive countries in terms of p2p crypto volume. Recently, Venezuela stands at third place in p2p trading volume in USD, after the U.S. and Russia. Venezuela commences accepting Petro at gas stations. However, Chainalysis elucidates that approximately 80% of transfer volume on the Venezuelan Criptolago exchange moves in transactions of USD 1,000 or more in cryptocurrencies. According to Sayari, Venezuela’s Zulia state owns Criptolago. The state’s governor, Omar Prieto, is at the apex of the management. Prieto is a staunch Maduro ally who is especially under U.S. sanctions for opposition to deliver humanitarian aid. 

 It is essential as the average Venezuelan earns about 70 cents per day. Consequently, Chainalysis points out, Criptolago’s transaction activity is allegedly driven “by people connected to the Maduro regime seeking to launder funds or move them out of Venezuela.” Meanwhile, cryptocurrency is a driving force in Venezuela. Immigrants can utilize it to send funds overseas faster and with lower fees than with fiat. 

“Cryptocurrency also enables them to do this without a bank account, which is difficult to obtain for many Venezuelans,” Chainalysis added. In March, the U.S. Department of Justice accused Venezuelan president Nicolás Maduro Moros with the other 14 Venezuelan Officials of hiding criminal activity behind cryptocurrencies. Paxful limits services for Venezuela over U.S. Sanctions. The accusations on Maduro include narco-terrorism partnership with the FARC for 20 years, according to U.S. Attorney Geoffrey S. Berman.

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