On Tuesday, September 15, 2020, in a video on Twitter, the Paxful team in Latin America stated that:
Due to regulations and sanctions related to the U.S. Office of Foreign Assets Control, the P2P exchange of crypto-currency will soon begin the deployment of its closure in Venezuela.
Paxful is one of the largest financial platforms for peer-to-peer or P2P exchanges in Bitcoin. Founded in 2014 by Ray Youssef and Artur Schaback, the platform's goal is to make Bitcoin easier for everyone from large corporations to traders.
The transnational company, which today has more than 4.8 million users, exists and operates under the regulations in force in the United States, a country with which Venezuela has tense political relations.
It is interesting to recall that Venezuela is facing political crises and financial turmoil. Their national currency has lost all its value. The country hopes to find a way out by creating the petro in 2018. According to the government, oil, gas, gold and diamonds are the basis of this currency, which should make it possible to overcome the American and European sanctions and to complement Venezuela's bolivar fuerte currency (VEF). In terms of the adoption of cryptos, Venezuela is also among those relevant to assessing the overall state of cryptocurrency use around the world.
Moreover, speaking of cryptographic platforms, Paxful has been very successful in the country during the first half of 2020:
4.5 million wallets registered
4.6 billion in recorded trade volume
January to June 2020 alone: USD 1.1 billion in trade volume, a 34% increase over (the first half of) 2019
According to a report by Chainalysis, Venezuela is an 'excellent example' of the forces driving the adoption of cryptocurrency in emerging countries, highlighting its use among ordinary Venezuelans as a means of mitigating economic instability?
Paxful CEO Ray Youssef said on Paxful's twitter last November that barriers to doing business in the country had increased significantly. However, he said:
'Venezuela remains a very important growth market for us. There is a huge opportunity for Venezuela to be the first closed-loop crypto-economy'.
Paxful reported that the total number of Venezuelan users of their platform reached 16,500, who reportedly conducted some 156,000 transactions with counterparts in 150 countries. Thousands of crypto-enthusiasts who will be leaving the platform soon?
Paxful now claims that they no longer offer services to users in Venezuela.
The crypto P2P exchange platform tried for several months to find a way to maintain their operations in Venezuela, but in the end they decided to comply with US demands under penalty of sanctions against the leftist government of the disputed president Nicolas Maduro.
Paxful stated on its website:
'To our Paxful family in Venezuela,
Today, we are sad to announce that Paxful will cease its activities in Venezuela (...) Our mission is to help the 4 billion people around the world who do not have access to banking services and we are truly dismayed that we cannot extend this appeal to the people of Venezuela at this time'.
Paxful said it 'would like to give 30 days to allow its users to withdraw their funds' for those who still have Bitcoins on the platform. This period is to be from September 16 to October 15.
'The rollout of our impending closure in Venezuela will begin by restricting the creation of new accounts in the country and closing any existing accounts. Existing users will have 30 days to withdraw their funds free of charge and will be notified directly by email on how to do so. '
Regarding Venezuelans who are abroad and who have verified their address, the company explained that if they have already confirmed that they are operating from abroad, they will be able to continue to make transactions on the platform without any inconvenience. '
The North American platform cited the strict regulations of the US Treasury Department's Office of Foreign Assets Control (OFAC). In a post on Twitter, the Paxful team clarified that the expensive regulations they refer to do not come from Venezuela but rather are related to the Office of Foreign Assets Control (OFAC).
'The United States does not recognize Maduro's government following a disputed election in 2018. Rather, it considers opposition leader Juan Guaido as the legitimate president of the Latin American country because of his position as speaker of parliament. OFAC sanctions prohibit U.S. citizens from doing business with the Venezuelan government or government-owned companies, among other restrictions. '
First of all, it should be noted that the FOCA administers a number of different sanctions programs. Sanctions can be comprehensive or selective, using asset freezes and trade restrictions to achieve foreign policy and national security objectives.
In addition, because OFAC classified Venezuela as a high-risk country, Paxful was required to comply with sanctions under U.S. financial regulations.
Matt Ahlborg, the founder of the cryptoanalytical company Useful Tulips, made a statement that U.S. sanctions against any country should accelerate the adoption of Bitcoin; he posted on Twitter:
'US compliance charges are tantamount to the idea that it is 'better to block a million good users than to let a bad user in! That's why we Bitcoin'.
Is Paxful's decision final? However, it seems difficult to operate and thrive in an economy in crisis.
Written by Laetitia Harson
Cartam: Free marketplace for cryptocurrency users
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