US introduces sanctions against Russian bank over Petro financing

US introduces sanctions against Russian bank over Petro financing

The U.S. Treasury Department’s list of global sanctioned entities just got a little longer. The agency has implemented blocks against a Russia-based banked, Evrofinance Mosnarbank, after the financial institution was allegedly shown to support Venezuela’s Petro cryptocurrency and was the “primary international financial institution willing to finance” the coin. 

According to a Treasury Department notice from this past Monday, the agency has accused the bank, which is reportedly owned by companies backed by Russia’s and Venezuela’s governments, of playing a role in the launch of the Petro. The Treasury adds that the state-backed digital currency is a “failed” project and states, “When the failed Venezuelan cryptocurrency, called the Petro, launched in 2018, Evrofinance emerged as the primary international financial institution willing to finance the Petro. Early investors in the Petro were invited to buy the cryptocurrency by wiring funds to a Venezuelan government account at Evrofinance.”

The Treasury also states that Evrofinance was partially owned by the former Venezuelan dictator Hugo Chavez who, in 2011, acquired a 49% stake in the company through the Venezuelan National Development Fund. Later, when Maduro assumed power, he continued the partnership and hoped that the bank’s participation would help the Petro “circumvent U.S. financial sanctions.”

The notice further indicates, “At the time of its incorporation, Russia’s Gazprombank, in which the majority Russian state-owned gas producer Gazprom is a shareholder, and Russian state bank, VTB Bank, which is Russia’s second largest bank, each owned a 25 percent stake in Evrofinance.”

PDVSA, Venezuela’s state-owned oil company, has also reportedly been supported by Evrofinance. That entity has been on the U.S. sanctions list since this past January and was the leading organization behind the launch of the Petro currency

That doesn’t bode well for the Petro, which has already been shown to be nothing more than a joke coin. The CEO of Venezuelan crypto startup Cryptobuyer, Jorge Farias, has asserted that the digital currency is definitely backed by PDVSA. He told reporters last August, “One Petro is […] supposedly backed by oil barrels produced by the national oil company PDVSA; the catch: PDVSA also has debts amounting to $45 billion.”

Sanctions against Russia and Russian companies have continued to increase and the country is close to introducing its own oil-backed digital currency. The impetus for creating the currency has been the sanctions and Russia has reportedly been seeking ways to remove its dependency on U.S. dollars in order to propel its economy forward.

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