GoKawiilThe country of Venezuela has had a few embattled decades, but it has massive oil reserves continually attracting buyers, despite the U.S.-led sanctions that effectively block dealings with the nation. A few years back, in 2023, Poland's state-backed Orlen energy group had $600m in hand and was looking to buy 6 million barrels during a sanction reprieve. Like many before him, one executive thought it expedient to use the USDT stablecoin cryptocurrency (1 USD = 1 USDT). It didn't end well, with $230 million worth of crypto unaccounted for at multiple stages in an adventure chronicled by the Financial Times.
The twisted web of transactions
Orleen enlisted an external company, Hannon, to take care of the purchase, which it did by enlisting the services of UK firm Lexcor Energy, which supposedly had a Venezuelan office. Hannon first needed to convert a large sum into USDT, and did so by exchanging $245m at multiple Dubai companies, adding $15m of its own to the deal. Only one of multiple transfers of $80m into 80m USDT was fully successful.
As for the other two, $135m exchange only produced 85m USDT out the other end, with $50m still unaccounted for. A third exchange of $30m also vanished (partially returning much later). The proverbial PNL is currently -$80m, and Hannon has 165m USDT in hand. All this while, three Polish oil tankers headed to Venezuela anchored there, continually racking up millions in demurrage and port fees, as they were being chartered for far longer than initially agreed.
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Weeks of delays followed, which Hannon pinned on Venezuelan energy company PDVSA. One of Hannon's reps, Kam Tse, headed to Venezuela himself with a colleague, loaded with the USDT, stored in multiple cold wallets on USB sticks. They stayed in high-end hotels, drove around in armored cars, and employed bodyguards out of concern for the money and themselves. Tse found many brokers claiming to be from PDVSA, a cadre later revealed to contain a substantial number of con-men, many of whom fled as a local investigation came cracking down.
The buyers were nevertheless undeterred, and they handed 60m USDT in a USB wallet to a purported representative of local energy corp Synergy. After a few weeks of waiting, a Venezuelan office sent him a picture of a purported PDVSA export schedule displaying all three Polish tankers set to be loaded with 1.9m barrels of oil each, but with no predicted date. Ever-trusting, Tse's team then handed Synergy's representative another 50m USDT on another USB wallet. Said representative vanished in a cloud of smoke. PNL currently sits at -$190m.
Seemingly desperate, Tse ordered a buy of 1 million barrels of a lighter blend of oil, eventually finding it contaminated, then switched tactics to acquiring fuel oil instead, signing a contract. At last, a break: some of the money spent in the Dubai exchanges came back; only 21m USDT out of a $30m input, but still better than zero. Tse pays Consulting Services, another Venezuelan firm, 11m USDT for the fuel.
Finally, some good news: 500,000 barrels confirmed loaded onto the one ship, half of the contracted amount. Tse provides Consulting Services with another 11m USDT for the rest of the fuel, but that was never delivered, and there was no further contact. Cumulative PNL = -$186m total. With $72m in shipping costs in total (far outweighing the expected profit), plus additional expenses, the Polish government's investigation pins the total lost and spent at $424m.
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