Category Archives: Nicolás Maduro

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Crypto-Funded Youth Bank Announced by Venezuelan President

Venezuelan president Nicolas Maduro has announced that the government has plans to initiate a bank for students and young people in his country.

According to news source Telesur, the president of the economically-beleaguered Latin American country was speaking at a mass youth ceremony at Aragua this week, promising to put 20 million Petros into the new banking project.

The Petro is the nation’s controversial oil-backed cryptocurrency, the first of two according to Maduro. It is condemned by the Venezuelan Congress and the subject of continual debate as the country continues to struggle with an inflation rate of 2,400% in 2017. The crumbling economy is now causing a humanitarian crisis with 600,000 Venezuelans fleeing to neighbouring Columbia alone.

The move has been widely condemned as a way to avoid US-led sanctions against the country. Similar accusations have been aimed at Russian president Vladimir Putin, after his recent statement that he would like to move Russia towards adopting a “cryptoruble”.

According to local news source Noticas24, Maduro’s new plan is to promote the mining of cryptocurrency by high school children, with each school having its own mining operation, using school IT departments’ computers to mine cryptocurrencies.

This move, along with the USD 1.2 billion startup for his planned student bank, is designed to raise funds for young people currently enlisted on the state-issued ‘Chamba Juvenil Plan’, an initiative to combat youth unemployment. Its goal is 100% youth unemployment in Venezuela. Currently, over a million young people are part of the Chamba Juvenil Plan, and the government expects that half a million more will be added in the coming months.

During his speech, Maduro said that the plan will also be extended to universities which should each have its own crypto mining farm to support and strengthen the economy of Venezuela.

The country still awaits the launch of the petro gold, a national cryptocurrency backed by precious metals, announced back in February 2018.

 

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Venezuela’s Petro Token Faces Allegations of Falsified Records

The controversial state-backed cryptocurrency of Venezuela, El Petro token, has met further contention after allegedly holding falsified records regarding the initial coin offering (ICO). Venezuelan president Nicolás Maduro reported USD 5 billion raised during the event, but both CCN and Criptomoedas Fácil report a discrepancy in the total reported and the amount possible to be raised according to the information on the whitepaper.

The Numbers

The whitepaper for the Petro token records 38,400,000 tokens in total to be sold, each valued at USD 60, and with a 60% discount added during the ICO stage. For each of these tokens to be sold at their valued price, the ICO would have raised USD 2.304 billion before subtracting the discount. The official documents released by Maduro reporting USD 5 billion raised is in direct contradiction to this.

This indicates that either the whitepaper contains misleading information about the actual value of the Petro token or that Maduro announced false claims about the earnings of the ICO.

Following the ICO, Maduro detailed the event received 200,927 participation requests from 133 different countries.

Further Controversies For El Petro

Each unit of El Petro is backed by one barrel of oil in Venezuela, introduced by Maduro to combat economic sanctions due to a what he dubbed a US-led blockade. There are, however, many that challenge the integrity of Maduro’s ambitions, denouncing it as a plan to compensate the lack of oil production that is seeing the state’s economy plummet.

Maduro does not have full support from his government, with the Venezuelan congress recently ruling El Petro as both unconstitutional and illegal. The National Assembly of Venezuela dubbed the currency a fraud, and a threat to potential investors. With many citizens in Venezuela struggling to provide themselves with basic essentials such as food and medicine, there is a call to invest the money raised in the ICO into rebuilding the economy. This would prove logistically challenging, as investors would surely demand compensation.

China-based credit rating firm Dagong see the Petro token as a good investment, however, suggesting it may aid international currency markets.

Other controversies aside, Maduro must address the financial discrepancies regarding the profits made from the ICO for it to be considered legitimate tender on exchange platforms.

 

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