Maduro’s Regime Allegedly Turns to Crypto to Dodge US Sanctions

Venezuelan President Nicolás Maduro and his government are allegedly exploring ways to circumvent recent US sanctions using cryptocurrency, according to critics and crypto activists.

Allegations and Context

Critics argue that the Maduro regime has been considering various methods to evade US-imposed sanctions, including leveraging cryptocurrencies. “When you’re talking about regimes that are subject to sanctions, they’re typically going to look for a variety of ways to evade those sanctions,” said Andrew Fierman, head of national security intelligence at Chainalysis, in an interview with Bloomberg. He noted that the Venezuelan government has a history of using diverse methods to sidestep sanctions.

The United States reinstated sanctions on Venezuela’s oil and gold sectors on May 31 due to the government’s failure to uphold democratic principles ahead of the upcoming elections in July.

Historical Use of Cryptocurrencies

A report by the Wilson Center in April, authored by Leopoldo López and Chainalysis’s Kristofer Doucette, highlighted the Venezuelan government’s long-standing use of cryptocurrencies to bypass US sanctions. The authors urged key governments to “rigorously enforce existing restrictions to prevent the Maduro regime’s exploitation of digital currencies.”

President Maduro previously launched the national oil-backed cryptocurrency token, Petro, in 2018, aiming to lift the country out of economic crisis. However, on January 15, 2024, Venezuela ceased Petro operations due to its failure to gain widespread adoption.

Broader Implications

Critics often cite Venezuela as an example of how digital currencies can facilitate illegal activities such as money laundering and corruption. The Wilson Center report emphasized the need for democratic governments to take decisive action to prevent the Maduro regime from exploiting cryptocurrencies to transfer illicit proceeds into the international financial system.

Venezuela is not alone in these efforts. Other autocratic leaders facing international sanctions, such as those in Iran and Russia, have also initiated crypto-related programs to evade restrictions.