TL;DR: Venezuela is widely thought to be among Latin America’s most cryptocurrency-accepting countries. Its government launched the very first state-backed crypto, for example. The reality is far different, however, as evidenced by the plight of a Venezuelan textile startup company when it attempted to pay employees in bitcoin as a way to help workers struggling with fiat devaluation. The company was fined and its equipment confiscated by SUNACRIP, the country’s official cryptocurrency watchdog.
Venezuelan Textile Startup Sanctioned for Paying Wages in Bitcoin
Venezuela, one of the most cryptocurrency-friendly countries in South America, should be open to any kind of cryptocurrency dealings, or at least that’s what President Maduro has said since launch of the country’s own crypto, Petro (now almost defunct). The notion was so widely held in the country an entrepreneur, identified as P.J., thought nothing of collecting payments and paying employees of his textile manufacturing company, AJ Confections, in bitcoin.
This was, as a social media post suggested, “an immediate solution” to the problem of devaluation. AJ Confections was being heavily hit by a common problem for all Venezuelans, massive devaluation of its government currency, bolivares. Payments collected in bolivares lose their value quickly, and significant amounts of money were becoming worthless in just weeks. So, the company started offering bitcoin as a payment method to preserve the value of its incoming cash flow.
AJ Confections also started offering to pay its employees in bitcoin, attempting to extend devaluation protection. However, this was not mandatory. Employees could also collect their wages in bolivares fiat currency if they desired. This was when disaster struck.
SUNACRIP Fines, Equipment Confiscation
After apparently offering to pay in bitcoin to a partisan of the government, who then complained and qualified the action as a scam, AJ Confections was visited by officers of the SUNACRIP, the national cryptocurrency watchdog, and was ironically fined 3 bitcoin. This action was made arbitrarily with no orders and no paperwork issued by any institution of the Venezuelan state.
The company could not pay the humongous amount of money that 3 bitcoin represents, and SUNACRIP proceeded to confiscate equipment consisting of “7 sewing machines, 1 8-head embroidery machine and 1 ‘Octopus’ heat transfer printing machine,” according to a witness. They also detained the company’s owner to make him sign a document under duress, effectively signing-over AJ Confections to the state in exchange for his immediate release.
According to a report from a local newspaper, this very well could be the result of an elaborate scam itself to trick local Bitcoiners into a kind of ransom in collaboration with corrupt government officials. There is no knowledge of the Venezuelan state managing Bitcoin addresses as part of the national treasury, for example, or other tracking measures. No one knows where the confiscated equipment is currently, and the company confirmed its ownership has already been transferred to the state.
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