Petro Unconstitutional? Venezuela’s National Assembly Calls It A Fraud

After much hype surrounding Venezuela’s recent breakthrough in the crypto world, namely Petro, it seems that the project is under criticism again. In a shocking twist, Venezuela’s national assembly has deemed Petro to be unconstitutional. It has criticized the country’s oil-backed currency through a public statement, labeling it as a “fraud” and warning investors to stay away from it.

Much of the criticism stems from the unconventional nature of Petro’s token sale in general.  According to the Venezuelan President, the project had raised over $735 million, which has raised a lot of eyebrows in the administration. Lawmakers have deemed it a result of the ongoing political crisis in the South American countries.

Reasons for Doubting Petro

• One of the foremost reasons of doubting the credibility of Petro is when one takes the buyer’s manual into consideration. It indicates that the PTR token will work on the chain of NEM blocks during the pre-sale stage. Investors remain wary of NEM, partly due to the 2015 incident involving a larceny of $500 Million. Experts believe that Petro will be built on top of the NEM network with a possibility of a swap with the ERC20 token at a later period. There is a possibility that Venezuela could be using a NEM-derived code to develop a new ledger. No officials from NEM have any comment on this matter whatsoever.
• A Majority of cryptoanalysts, economists and even political opponents, including the Congress controlled by the opposition have been vocal against the project. According to some of them, it is nothing but a vehicle of corruption. Some senior lawmakers in the U.S. have also indicated that it is nothing but a ploy by the country to navigate past the economic sanctions imposed on the South American nation. Overall the crypto community’s response was mixed. Some journalists like Max Keiser have expressed his support of the project and its effect on the country’s hyperinflation.
• The resentment regarding Petro had manifested after the recent actions of forcing businesses and retirement accounts alike to accept and adapt it. Rafael Guzman, who has been a strongly voiced critic of Petro since its inception, has claimed that the project is merely a way for the government to embezzle funds. According to him, the project is not the solution for the country’s dire economic predicament and is a sure sign of corruption on the part of the government.
• Francisco Sucre, another well-known critic of the project has highlighted one particular point. National Assets cannot be used as collateral, meaning Petro cannot be backed by Venezuela’s oil reserves. He also added that due to the current state of politics in the country, the situation has become even more complicated.
• According to Prosperi , “The PTR began with a war of lies when Maduro said it was the first virtual currency, mentioned at the time of highlighting the monetary reconversion and the entry into force of the Bolívar Fuerte, and they said that from there the strength of our currency would emerge, On the contrary, it has lost value daily, and the Sucre was presented as a currency that would exceed the dollar.”

Final Thoughts

In spite of the harsh criticism it has been receiving, Petro also has its own share of fans and backers. State-owned companies and the country’s airlines were ordered by Venezuelan Leader Nicolas Maduro to accept this cryptocurrency. If implemented right, Venezuela can experience serious economic improvement and stability. According to many, Petro will fix the problem with the Bolivar, Venezuela’s currency which has steadily declined in value.

Petros’ new mechanism could attract international investors which will result in lifting up the country’s current credibility index. The Chinese Credit Rating giant Dagong has claimed that Petro will help the global currency system in the long run.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

Image courtesy of David Hernandez via Flickr