Venezuela’s recently launched, state-backed cryptocurrency petro was brought to fruition by a number of wealthy Russian businessmen with connections to the Russian government, according to a new report from Time.
Citing sources familiar with the creation of petro, Time reports that senior advisers from the Kremlin, with approval from President Vladimir Putin, helped to oversee the development of the cryptocurrency.
Petro, which launched on Feb. 20, is accepted as legal tender in Venezuela. Its value is tied to the nation’s oil reserves and is intended to be used to pay taxes, fees and other public needs.
Petro also provides Venezuela with a workaround to avoid sanctions placed on the country by the U.S. government. Venezuelan president Nicolás Maduro has gone so far as to refer to the cryptocurrency as the “kryptonite” to the U.S. government’s “Superman.”
Undermining U.S. sanctions is reportedly what piqued Russia’s interest in the project. According to the report, Putin signed off on a plan in 2017 to help Venezuela develop a cryptocurrency to avoid the punishing economic sanctions placed upon the country by the U.S.
“People close to Putin, they told him this is how to avoid the sanctions,” an executive at a Russian state bank told Time. “This is how the whole thing started.”
Russian connections to the project could be seen in plain sight on the day of the cryptocurrency’s launch. Sitting in the front row during an unveiling ceremony at the presidential palace in Caracas were Denis Druzhkov and Fyodor Bogorodsky — two Russian men with close ties to Russian state banks and Kremlin officials. President Maduro thanked the two men personally for helping fight against American “imperialism.”
“Russia made its stronghold here in Venezuela,” Armando Armas, an opposition member of Venezuela’s parliament, told Time. “Now they are using Venezuela as a guinea pig for their experiment.”
Russian officials have been looking for ways to undermine the U.S. dollar. Andrei Kostin, the head of the second-largest state-controlled bank in Russia, said in a speech last month that “the reign of the dollar must end.”
Earlier this week, President Trump issued an executive order prohibiting U.S. citizens from purchasing or trading petro.
“President Maduro decimated the Venezuelan economy and spurred a humanitarian crisis,” Treasury Secretary Steven Mnuchin said Monday. “Instead of correcting course to avoid further catastrophe, the Maduro regime is attempting to circumvent sanctions through the petro digital currency — a ploy that Venezuela’s democratically elected National Assembly has denounced and Treasury has cautioned U.S. persons to avoid.”