Poland's $424 Million Venezuela Oil Deal Collapses After USDT Payments

A man entered the Hotel El Avila in Caracas, Venezuela, on January 5, 2024, carrying a USB drive containing approximately $60 million in Tether (USDT). The funds had come from Poland's state-controlled refiner, but the oil purchased with them was never delivered.

Poland's state refiner Orlen lost around $424 million, and three former executives now face criminal charges, the Financial Times reported.

A Deal Struck on a Yacht

The deal began in Abu Dhabi in November 2023 over the Formula 1 weekend. The head of Orlen Trading Switzerland met a 25-year-old trader from Hong Kong on a yacht.

On November 29, a contract was signed. Orlen's Swiss subsidiary agreed to purchase 6 million barrels of Merey 16, Venezuela's low-cost heavy crude, for $345 million.

Within five days, $230 million was wired. There was no collateral and no bank guarantee.

The Money Became a Token

Due to US sanctions, Venezuela's state oil company PDVSA was shut out of the dollar banking system. Consequently, the cash was converted into USDT, a dollar-pegged digital token, and routed through brokers in Dubai.

Over $132 million in USDT was subsequently delivered in Caracas hotels and restaurants, transferred via USB drives. One conversion of $135 million yielded just $85 million, with the missing $50 million tied up in a UAE court.

This was not unprecedented. BeInCrypto reported in April 2024 that Venezuela had turned to Tether to keep its oil revenue flowing.

The Ships Waited, and Waited

Six chartered tankers remained off Venezuela for months. They departed empty or were diverted to other buyers. The shipping costs alone amounted to roughly $72 million.

PDVSA stated it did not receive any payment.

Reuters, citing PDVSA, reported: "...did not allocate any cargoes to Orlen or its intermediaries because it had not been paid."

On August 7, Warsaw prosecutors charged three former executives with failing to safeguard 1.5 billion zloty ($378 million) in company assets. They could face up to 25 years in prison.

The underlying issue is that the loss occurred the moment a state company sent $230 million to strangers without any collateral.