The numbers just don’t add up in the first state-backed cryptocurrency offering.
Venezuela launched El Petro amid a blaze of publicity with President Nicolas Maduro claiming that the venture raised $5 billion for the cash-strapped economy that has seen inflation rage like a wild fire for the past five years.
Mismanagement by the government and corruption are blamed for the state of Venezuela’s economy.
To counter the crippling impact of inflation, Maduro launched El Petro to raise some much-needed foreign cash.
Then someone noticed that the most Maduro could have raised was 38,400,000 (the number of tokens) times $60 dollars (the face value).
How much did El Petro really raise?
That’s a maximum offering of $2.3 billion – barely half of the amount Maduro claimed.
But the real amount is much lower as the government sold the tokens at 46% of face value, if you believe the spokesman.
The official discount was said to be 60% making the token value $36 – totalling $1.38 million if all the tokens were sold.
In the shambles of what Venezuela calls a government, El Petro is worthless or valued at $36 depending on your standpoint.
Why worthless? Well, the Venezuelan parliament has declared El Petro illegal, unconstitutional and a fraud.
Meanwhile, Maduro has announced a devaluation of the bolivar fuerte or ‘strong bolivar’ on June 4.
From then, three noughts are lopped off the value. A thousand bolivars become a single strong bolivar.
Bolivar devalued after years of hyperinflation
To gain some idea of how the economy works, since Maduro entered office in April 2013, the bolivar has lost 99.9% of value against the US dollar.
A handful of bolivars worth $100 then is now worth just a single cent.
The government has decided not to take in existing notes for replacement with newly minted currency because people would be receiving a pittance back.
“Venezuela has been victim of a brutal, economic war,” said Maduro. “The government has been unfairly targeted by the US, EU and Canada for sanctions over allegations of abusing democracy and rights.”
Maduro is running for re-election on May 20 in what observers are already branding a rigged vote designed to keep him and his socialist cronies in power for longer.