Venezuela says its cryptocurrency raised $735 million—but it’s a farce

Enlarge / Nicolas Maduro, Venezuela's president, speaks during the petro cryptocurrency launch event in Caracas, Venezuela, on Tuesday, February 20, 2018. (credit: Wil Riera/Bloomberg via Getty Images)

Venezuelan President Nicolis Maduro claims a new state-sponsored cryptocurrency called the petro raised $735 million on Tuesday-its first day on sale. But the government hasn't provided any way to independently verify that $735 million figure. And there's reason to doubt almost everything the Venezuelan government has said about the project.

The presale was a disorganized mess, with basic technical details still being worked out after the sale supposedly began. The petro network itself hasn't launched yet-allegedly that will happen next month-and the government has hardly released any information about how it's going to work.

Moreover, there's little reason to believe that the petro will maintain its value over time. The Venezuelan government has portrayed petro tokens as backed by Venezuela's vast oil reserves, but they're not. The government is merely promising to accept tax payments in petros at a government-determined exchange rate linked to oil prices. Given the Venezuelan government's history of manipulating exchange rates, experts say investors should be wary of this arrangement.

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