Venezuelans cut off from Binance: How is this related to elections?

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As a seasoned analyst with extensive experience navigating the complexities of global politics and financial markets, I find myself closely watching the latest developments in Venezuela regarding Binance and its relationship with the Maduro administration.

Venezuelan authorities have also blocked the world’s largest cryptocurrency exchange, Binance.

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During the unrest triggered by the Venezuelan presidential election results, the government limited users’ ability to use Binance and various other digital platforms.

🚨 Binance blocked on CANTV tonight 🚨

— VE sin Filtro (@vesinfiltro) August 10, 2024

Representatives from Binance acknowledged issues some local cryptocurrency users were encountering when trying to access the exchange platform. Yet, they reassured users that their funds remained secure.

Dear Binance Community,

— Binance Latinoamérica (@BinanceLATAM) August 10, 2024

Due to the restriction on accessing Binance after the prohibition of X, the Venezuelan president, Nicolas Maduro, retaliated against Elon Musk, who is the platform’s owner, following their public disagreement.

As a result of the turmoil following Venezuela’s presidential election in July, Musk labeled Maduro as both a “dictator” and a “jester.” In response, Maduro countered by accusing Musk of stirring up “hatred,” “fascism,” and the potential for civil war.

Maduro also signed a decree requiring Venezuelan telecom regulator Conatel to block X for ten days.

What’s happening with the Venezuelan elections?

On July 29th, Venezuela’s National Electoral Council declared Nicolás Maduro as the winner in the presidential election, a position he ran for under the United Socialist Party of Venezuela (PSUV). However, even with the PSUV candidate winning, demonstrations erupted across the nation. Thousands of Venezuelans ventured into the streets of Caracas to voice their disapproval of Maduro’s re-election.

Critics argue that the officially declared 51% vote for the current president is inaccurate, with their assertion being that he only received around 30%. This discrepancy has sparked widespread protests, as thousands of dissatisfied citizens have taken to the streets.

As a researcher, I’ve observed that numerous nations declared they wouldn’t acknowledge Maduro’s triumph. Consequently, in retaliation, Caracas initiated the process of withdrawing its diplomats from those specific nations.

Maduro and his loyal troops asserted that the U.S. orchestrated the demonstrations against them. They believe the motivation behind this is Washington’s long-standing interest in Venezuela’s abundant oil resources.

I’ve consistently engaged in conversation. If the U.S. administration agrees to recognize sovereignty and cease threats against Venezuela, we can re-engage in talks, but only under one condition.

Nicolas Maduro

As an analyst, I can express this statement in a more conversational and first-person manner as follows: “I, along with the president’s backers, plan to attend rallies in protest of the opposition and assist law enforcement in apprehending any individuals causing disturbances or engaging in riots.”

Maduro actively promoted the cryptocurrency development in Venezuela

For over a decade, Venezuela has been grappling with an economic downturn marked by inflation and the weakening of its local currency. As a result of financial struggles, the government has been compelled to explore innovative methods for transactional systems.

In late 2017, Maduro unveiled plans for a new cryptocurrency within Venezuela, named Petro. This move aimed to assist the nation in asserting control over its currency matters and bypass the financial sanctions imposed on them.

In late 2018, during a severe economic and social crisis, the government initiated a currency revaluation by eliminating five zeros from the banknotes and introducing a new currency, the Sovereign Bolivar. This currency was tied to Petro, with each unit equivalent to the cost of a single oil barrel produced domestically.

Additionally, Maduro gave permission for the distribution of resources to establish student-run farms dedicated to mining cryptocurrency throughout the country. Furthermore, he made it possible for all savings banks to contribute to the creation, acquisition, and development of our country’s own digital currency.

The end of Petro

By mid-2024, Venezuela officially discontinued the use of their native cryptocurrency, the Petro. Consequently, all digital wallets associated with the trading of this currency, which could only be accessed through the Patria platform, were shut down.

There were multiple factors behind this situation. Initially, the coin consistently failed to function, even after Maduro’s efforts to reactivate it. In 2020, he instructed airlines departing from Caracas to use Petro for fuel payments and enforced its usage for government services like obtaining a new passport.

Through an innovative approach, the Venezuelan administration sought to bypass U.S. sanctions. Specifically, the Maiquetia International Airport established a new method for gathering aviation taxes using the Jet Man Pay app. This digital platform converts the taxes into electronic currency and then transfers them outside of the country.

Involved in this process were partners hailing from China, Russia, and Hungary. These nations have government-managed accounts that received proceeds from aviation taxes, which had been transformed from Bitcoin (BTC) into U.S. dollars.

As a researcher delving into the realm of digital currencies, I’ve observed that up until now, the application of this specific cryptocurrency has been predominantly confined to certain governmental transactions, such as tax payments.

Additionally, it’s worth noting that Petro was implicated in a bribery scandal. This corruption, coupled with questionable practices in managing funds from cryptocurrency-based oil operations, significantly contributed to Petro’s downfall. These financial inconsistencies eventually led to investigations and allegations of misconduct, resulting in the resignation of influential oil minister Tareck El Aissami and the arrest of numerous officials, including high-ranking members at Sunacrip, the crypto regulatory body.

Additionally, it resulted in increased regulation of mining activities within the nation, as other digital currencies such as Bitcoin served as a highly sought-after safeguard against the inflation and deflation of the bolivar.

What will happen to Binance in Venezuela?

The influence of Binance in Venezuela extends beyond mere speculative cryptocurrency trading. Many peer-to-peer exchanges in the country rely on Binance as a crucial component, given the severe devaluation of the Bolivar. This necessity arises from locals seeking access to the US dollar, which they find through stablecoins and major cryptocurrencies. Over the years, Binance has served as the primary platform for Venezuelans to engage in such transactions.

As such, restricting access could have significant negative consequences for locals.

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2024-08-13 18:38