Venezuela Shuts Down Crypto Exchanges and Mining Farms – Everything You Need to Know

Ramirez was replaced by Anabel Pereira Fernández, who served as president of the Fondo de Protección Social de los Depósitos Bancarios, (FOGADE), which is Venezuela’s equivalent of the US Federal Deposit Insurance Corp (FDIC).

As the new Sunacrip, Fernandez ordered the shutdown of several crypto exchanges and mining farms in the past few days. There was no official statement on the action. However, the country’s national crypto body, Asociación Nacional de Criptomonedas (Asonacrip), took to Twitter to protest the move.

“It has been confirmed that the closure of the digital mining farms in Bolívar State was requested. We consider this an arbitrary measure, which goes against the interests of private industry,” said a roughly translated tweet from Asonacrip on 25 March.

According to reports, mining farms in the states of Lara and Carabobo have also been ordered to close, along with several crypto exchanges. Another mining company, Doctorminer, released a detailed statement announcing “power outages in all Venezuelan hashrate infrastructure.” According to the statement, the national energy supplier (CORPOELEC) ordered the shutdown due to “investigations related to the possible mishandling of public funds.”

This is in stark contrast to the pro-crypto community that has been established in Venezuela in recent years. Under President Nicolas Maduro, the country was often referred to as a crypto haven, with digital assets positioned as tools to revitalize Venezuela’s economy. Over the past few years, Venezuela has formed the National Crypto Department, created a framework for crypto mining, and institutionalized the registration of crypto exchanges. In 2021, the country even launched its own cryptocurrency called The Petro, an Ethereum-based token backed by oil reserves.

However, power over the Venezuelan crypto industry was placed heavily in the hands of Joselit Ramirez. As a result, avenues for corruption began to emerge. There were reports that government officials had their own crypto mining farms, and that these high-ranking executives used their influence to hold back the competition and confiscate their equipment.

There were also allegations involving Venezuela’s state-owned oil company PDVSA and the country’s crypto division. Over the past couple of years, there have been whispers that the country’s energy minister Tareck El Aissami and Ramirez had diverted funds from undeclared oil sales. At the same time, Petro saw a strong transition from a transparent token on a public blockchain, to a centralized, non-revisable token with no real backing in tangible oil.

This has led to the restructuring of Venezuela’s national crypto regulatory agency and the arrest of Ramirez. Also, with the oil sales probe looming over his head, El Aissami was also forced to resign. Both individuals are on the FBI’s most wanted list, with bounties of $5 million and $10 million, respectively. Subsequently, Anabel Pereira Fernández, as the new head of Venezuela’s crypto regulatory body, has ordered crypto mining firms and exchanges to cease operations.

Of course, the crypto community in Venezuela questions the motive for the sudden action. Some believe the closure of mining farms could be an effort to conserve energy amid Venezuela’s economic struggles. Others believe it may be related to the corruption investigation involving PDVSA and the national crypto department.

The biggest fear, however, is that the crackdown is part of a larger regulatory crackdown on the digital asset industry in Venezuela. And with no official statement from the new Sunacrip, speculation surrounding this development continues to grow. Therefore, it remains to be seen how Venezuelan leaders and the country’s crypto community navigate these challenges.