For these two reasons, at the end of 2017 the Venezuelan government led by Nicolás Maduro thought that cryptocurrencies could be a solution to the country’s disastrous economic situation. He therefore decided to create a state cryptocurrency: the petro. Knowing almost nothing about cryptocurrencies, the government relied on a not yet thirty-year-old startupper and computer programmer: Gabriel Jiménez to do it. The journalists Nathaniel Popper and Ana Vanessa Herrero they told his story on the New York Times. As anyone who has followed the events of Venezuela or cryptocurrencies at least a little over the past three years, it is not a story that ends well. One of the reasons is that, as he wrote the New York Timesto speak of “state-controlled cryptocurrency” is “almost an oxymoron”.
To write the article – entitled “The programmer and the dictator“- the journalists of the New York Times they wrote that they had access to “hundreds of emails, text messages and government documents” and that they spoke to “dozens of people who had to deal with the petro”, starting with Jiménez, “a slim guy, with big black glasses standing on his face between a scruffy beard and a receding hairline. ”
I’ve been chasing this story for months. Hope you’ll take a virus break and read it – a high-stakes cryptocurrency tale about an idealist who agreed to create a digital coin for the dictator of Venezuela. https://t.co/QPRWI1ozT8
– Nathaniel Popper (@nathanielpopper) March 20, 2020
In 1998, when the socialist Hugo Chávez took power in Venezuela, Jiménez was eight years old. In 2013, when Chávez she died and his place was taken by Vice President Maduro, Jiménez was in the United States, where he had gone to study and where he had also married. The New York Times describes him as hostile, since then, to the policies of Chávez and Maduro, and explains that in his years in the United States he worked for a while with Ileana Ros-Lehtinen, a Republican deputy who often criticized Maduro.
Read also:A shady history of cryptocurrencies from Russia
In 2015, when the opposition in Venezuela’s parliamentary elections took more votes of the Socialist Party of Maduro, Jiménez decided to return to Venezuela with his wife. He found a country in great difficulty, due to the tightening of control exercised by Maduro and all the serious consequences of hyperinflation. He still managed to found The Social Us, a startup that put Venezuelan programmers and designers in touch with US companies: companies could find cheaper workers, and workers could get paid in dollars instead of bolívar.
(EFE / Miguel Gutierrez)
However, not everything in Venezuela could be bought in dollars. For this reason Jiménez began to be increasingly interested in cryptocurrencies: all those currencies based on a digital currency that users keep in virtual wallets and that are made to work according to mathematical laws and, in the purest versions, independently of each type of central authority (such as a bank or state). Jiménez decided to pay his employees in cryptocurrencies because, as he wrote the New York Times, “Although they had considerable volatility, they were still more stable than an account in a Venezuelan bank, and then they were not subject to the decisions of the Maduro regime”. Other Venezuelans also understood the usefulness of cryptocurrencies, in that particular context, and many, among those who could afford it, tried to take at least some, even if only for small daily expenses.
In effect, the cryptocurrencies were independent of Maduro’s control, whose government could only limit the withdrawals of bolívar from the banks, without any control over any conversions of bolívar to bitcoin (or other cryptocurrencies) and on all transactions made in bitcoin. “In the beginning,” wrote the New York Times, “The Venezuelan regime saw bitcoins as a threat.” Then someone in government thought he could take advantage of this: bitcoins could be independent of sanctions imposed by other states against Venezuela, for example.
Read also: Georgia still believes in Bitcoin a lot
The Maduro government therefore thought of keeping what they liked about cryptocurrencies (the fact that they were independent of the control of foreign states and organizations) by trying to remove what they did not like (freedom from control of the Venezuelan state). It was therefore thought to create a state cryptocurrency which – going against one of the principles underlying cryptocurrencies – should have been somehow dependent on the value of the large Venezuelan oil reserves.
Nicolás Maduro (Carolina Cabral / Getty Images)
Since he had in no way the skills necessary to create a cryptocurrency (moreover one that already in his premises was “almost an oxymoron”), the government got in touch with Jiménez, because someone had read an article, released on October 10, 2017, in which he was talked about.
Maduro then sent one of his emissaries – Carlos Vargas, the man who had read and mentioned the article – to the offices of The Social Us. Vargas explained to Jiménez that only he could do what the government had in mind and Jiménez thought, in short, that by accepting the proposal he would be able to work for the government, but doing something that would ultimately be independent of the control of the same. government. Vargas wanted that something it was called Petro Global Coin; Jiménez proposed a simpler name: petro. Jiménez had some more detail for the government about what the petro might have been, but it seems that for several days there was no significant interaction between him and the government. Then, in early December, while Jiménez was at a conference in Colombia, Maduro ad on TV that Venezuela would launch its national cryptocurrency: the petro.
After the announcement, Vargas told Jiménez to return to Caracas as soon as possible to take care of the project full time and Jiménez found himself dealing with the most important members of the Venezuelan government, in many cases realizing how little they knew about criptovalute. He decided to work on the project anyway and, in a speech to The Social Us employees, standing on a desk, he said, “We can free the people from government control.”
Someone decided to believe in the project, someone else left. A friend and collaborator of his tried to dissuade him – “You will have to work for them and in the end, when you no longer need them, they will pull the project out of your hands” – but he replied that it could not happen because “no one else, in all of Venezuela, would be able to do what I will do ».
At first, Jiménez actually seemed to be in control. The New York Times he said that his views were held in high regard and that, for example, when he asked that the petro project be presented at the Venezuelan central bank headquarters, so as to give credibility to the project, the government made a commitment to make it happen. As for the more technical details, it seems that in general Jiménez managed to do what he wanted, probably because nobody in the government really understood what he was doing.
At the end of December 2017, the petro project was officially presented at the Venezuelan central bank, in the presence of some American cryptocurrency experts and with Vargas, just appointed superintendent of the “crypto assets“Venezuelans, who spoke of the need to” transform the entire system of the country to move towards a new economic system “.
After that conference, Vargas, Jiménez and the American experts were invited to Roca, Maduro’s personal residence. Sitting on the couch next to his wife and surrounded by some senior officials from his administration, the president chatted with guests and, among other things, congratulated one of the Americans saying that he had recently seen him in a Netflix documentary about bitcoin.
Jiménez told al New York Times that he was favorably surprised by the fact that the context at Roca was rather modest and totally lacking in luxury and that Maduro even asked his vice president to try to fix an air conditioner that made too much noise. Speaking to his guests Maduro added that, thanks to the announcement on the petro, bitcoins had reached their all-time high.
Read also: In the best neighborhoods of Caracas
That meeting at the Roca was also the first in which Jiménez realized how distant his idea was from that of the government. It was there, for example, that the finance minister proposed for the first time – presenting a series of documents prepared without Jiménez’s knowledge – to tie the petro to Venezuelan oil reserves. Jiménez objected, realizing that it was a way of harnessing the value of the petro to the will of the government, but obviously the finance minister got the better of it. Very briefly, the petro then became a kind of Venezuelan state title. Certainly not something capable of “freeing the people from government control”.
Nick Spanos, the American that Maduro had seen in the documentary, told al New York Times that he understood that Jiménez would become the scapegoat, and that he said to him: “I would like to have a flying carpet to take you away from here.” Jiménez managed to achieve something, but many things were imposed by the government.
The final sign of Jiménez’s defeat was a conversation in which, according to his version, Finance Minister said to him access to an important document relating to the petro: “You must understand that this is now a state project. If you do not send me the document, I will not be responsible for what will happen to you ». There were also problems for the employees of The Social Us who had chosen to work on the project: it was discovered, for example, that the government had compiled dossiers on them, probably in order to eventually blackmail them.
In a series of not very clear events, which also pass by a Russian insertion possible in the preparatory work necessary for the launch of the petro, Jiménez still had to continue to deal with the project, because in fact he was perhaps the only one able to really do it. Among other things, he had to spend an entire night writing codes necessary for the operation of the petro, supervised by armed people.
After that night they took him to Miraflores, Maduro’s presidential palace. There the president behaved kindly and, surrounded by many other members of his government, asked him how things had gone since their previous meeting with Roca. Jiménez lied and replied that everything had gone well. “I didn’t know who my enemies were,” he explained later.
Jiménez, Maduro and the other officials then moved to another room that had been set up for a television studio. There on February 20, 2018 was officially introduced the petro: Jiménez was put in his hand a pen with which to sign a contract that assigned him the role of “commercial agent” of the petro. A document that, wrote the New York Times, “Had refused to sign for weeks.” Maduro said that investments of over $ 700 million had already been raised that day, remembered the petro’s link with the country’s oil and publicly thanked Jiménez and The Social Us for the collaboration.
In 2018 Venezuela’s economy went even worse than in 2017 and inflation arrival to numbers with six zeros. Cryptocurrencies also went badly and a bitcoin was worth a little over three thousand dollars, after which at the end of 2017 the value had been almost 20 thousand dollars. The petro it had therefore been the wrong thing, done the wrong way, at the wrong time and in the wrong place. Less than a month after its launch, the United States prohibited their use.
The Social Us – associated with many of the petro’s failure – struggled to find new customers and jobs, and Jiménez was the subject of criticism and investigation in Venezuela and abroad. Unable to pay the rent for his apartment, and since he had also separated from his wife in the meantime, he returned to live with his mother. The ex-wife managed to convince him to leave Venezuela before the government could think of indicting him for something, and in April 2019 he sold his car to buy a ticket to the United States. He went to live with his father, who however waited to serve three years in prison for his role in a money laundering story linked to a Caribbean bank (with which his son had nothing to do).
Now the father is in prison and Jiménez has obtained the right to be able to stay in the United States by showing that, due to his role in petro, he would be at risk if he returned to Venezuela. To the New York Times he said he has a “great depression” and is practically without money, but that he is collaborating with a startup in the San Francisco area that deals with cryptocurrencies. “I know I deserve to suffer, but believe me, life is giving me a lot of suffering.” The petro was repeatedly unnecessarily relaunched and ended up being a sort of check given to some pensioners, now without any of the characteristics with which it was conceived.
