Russia bank helps Venezuela defy US cryptocurrency sanctions

CARACAS, Venezuela — Investors looking to buy Venezuela’s new cryptocurrency may want to head to a little-known Moscow bank whose biggest shareholders are President Nicolas Maduro’s socialist government and two state-controlled Russian companies under U.S. sanctions.

Evrofinance Mosnarbank has emerged as the only international financial institution so far willing to defy a U.S. campaign to derail the world’s first state-backed digital currency, called the petro, even before it begins to function.

Early would-be investors who registered with Venezuela’s government and downloaded the petro’s wallet software — available in Spanish, English and Russian — were then invited to buy the cryptocurrency by wiring a minimum of 1,000 euros to a Venezuelan government account at Evrofinance.

The bank’s place in the rollout of the petro is further evidence of Russia’s role in the creation of a cryptocurrency that much of the digital world has shunned but that Maduro hopes will allow Venezuela to circumvent U.S. financial sanctions imposed last year.

At the petro’s launch on Feb. 21, Maduro heaped praise on two Russians in the audience who worked with wealthy, Kremlin-connected businessmen, thanking their previously unknown startups — Zeus Exchange and Aerotrading — for their role developing what he joked would be a kind of “kryptonite” against U.S. economic dominance.

A day later, he dispatched his economy minister to Moscow to brief his Russian finance counterpart.

And in March, the Russian Association of Cryptocurrency and Blockchain awarded the Venezuelan government an award for its role “challenging the de-facto powers of the international financial system.”

Russia’s interest in the petro stems from its own increasingly pariah status in the west, said Claiborne W. Porter, the former head of the U.S. Justice Department’s bank integrity unit. As relations with the U.S. and European Union become more tense, both countries are looking for ways to demonstrate political strength while moving money outside the American financial system.

“Like kids on the playground, Venezuela and Russia think they are fighting a common bully in U.S. sanctions, so they’re going to try and form a united front,” said Porter, who is now the Washington-based head of investigations at consulting firm Navigant.

Russia has provided Venezuela with billions in debt relief over the years and is a major investor in the country’s oil industry. That financial lifeline has become more important since the Trump administration last year banned Americans from lending money to the nearly bankrupt government and now threatens to slap sanctions on the OPEC nation’s oil industry if Maduro goes ahead with presidential elections this month that are widely seen as a sham. In March, Trump signed an executive order banning Americans from any dealings with the petro.

Evrofinance and its executives didn’t return repeated email requests for comment. But after The Associated Press’ inquiries, all references to the bank were removed from the petro’s wallet, leaving prospective buyers with no guidance on how to actually buy it, though it’s still listed for sale in rubles and euros as well as three other widely circulated cryptocurrencies.

Venezuela’s government purchased a 49 per cent stake in Evrofinance in 2011, …read more

Source:: Nationalpost – News


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