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Venezuela’s debt to Russia will not be paid in ‘petro’ crypto

March 28, 2018 | By Tom Hart | 0

A senior Russian official has confirmed that Venezuela’s debt to Russia, a total of $3.15 billion owed to the Kremlin over a 10-year period, will not be repaid in any part with Venezuelan state cryptocurrency petro.

Konstantin Vyshkovsky, chief of the Russian finance ministry’s state debt department on Tuesday denied rumours that Venezuela had offered to pay part of its debt to Russia in cryptocurrency.

Venezuela’s restructured debt repayment deal – signed last year – sees the South American country pledge to make “minimal” repayments to the Kremlin over the next six years toward ultimately paying back a total of $3.15 billion over a decade, Reuters reports.

‘World’s first official state cryptocurrency’

Backed by controversial Venezuelan President Nicolas Maduro, the petro was launched in February. It was billed as the world’s first-ever official state cryptocurrency.

Backed by Venezuela’s oil reserves wherein the value of a barrel of oil is directly pegged to the value of a single petro token, the cryptocurrency was launched as a means to evade sanctions enforced by the United States.

U.S. President Donald Trump on Friday signed an executive order against Venezuela’s controversial ‘petro’ cryptocurrency. Several U.S. government officials have for some time been vocal in their criticisms of the communist state’s government-approved coin, named the petro. Senators Bob Menendez and Marco Rubio, who ran for president in 2016, lead the crusade by penning letters to the Treasury Department.

The problem with the petro

This caused the US to vehemently object to Venezuela’s use of the petro. As such, Trump has banned US citizens from using the Venezuelan cryptocurrency altogether.

The executive order said: “All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.”

The Treasury Department has yet to respond directly to the letters’ contents but did confirm that sanctions risks would apply to Americans purchasing the token.

Russian revelation

The Russian official’s revelation comes soon after a dramatic report from Time Magazine that pointed to ties between Russia and Venezuela in the development of the latter’s cryptocurrency.

Russian President Vladimir Putin was briefed on the effort and personally “signed off on it last year” the report claimed, pointing to Denis Druzhkov and Fyodor Bogorodsky as the two key Russians involved as Maduro’s advisers on the petro.

The report, incidentally, was published within a day of US President Donald Trump issuing the first-of-its-kind executive orderbarring American citizens and residents from trading or acquiring the petro.

However, the Kremlin quickly dismissed the Time Magazine report as ‘fake news’ and a ‘blatant lie’.

Artyom Kozhin, Russia’s deputy director of Information and Press Department of the Russian Foreign Ministry, said there was “no way” that Russian financial authorities ever participated in the project.

The official stated over the weekend: “During the course of the meeting held on February 21, 2018 in Moscow, Venezuela’s Minister of Economy and Finance Mr. [Simon] Zerpa indeed handed over a booklet on the cryptocurrency to the Russian Finance Minister exclusively for the purpose of informing Russian partners about this project.”

“None of the parties mentioned, discussed or reviewed the topic of cryptocurrency use in Russian-Venezuelan cooperation.”

Building upon claims to have raised $735 million on its first day of launch, Venezuelan president Maduro recently said the still ongoing token sale has raised over $5 billion to date. This has not been verified and sounds dubious to say the least.

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