[Coin Crime] "If you give us Tether, we will give you oil" - Polish state-owned company falls victim to international fraudsters

[Block Media Reporter Yang Won-mo] "We processed the oil payment in the dollar stablecoin Tether, so the shipment will be made soon."

Officials from the Polish state-owned company believed this statement as it was. In January 2024, off the coast of the José oil export terminal in eastern Venezuela, three supertankers had been docked empty for days. Orlen's Swiss subsidiary, Orlen Trading Switzerland (OTS), which had chartered the ships, was growing anxious. The promised Venezuelan crude oil had not arrived for nearly a month.

OTS had already paid a deposit of $230 million (approximately 319.2 billion won) to the Dubai company Hanan International. Hanan was trying to purchase crude oil from the Venezuelan state oil company PDVSA through a local intermediary. However, there were issues with the payment, and the resumption of U.S. sanctions was just three months away. Ultimately, Hanan's team headed directly to Venezuela.

On January 5, accompanied by armored vehicles and security personnel, Hanan's team met a local broker at a hotel in the capital, Caracas. They handed over a USB containing a digital key that could access $60 million USDT (approximately 83.3 billion won), and on the 28th of the same month, they transferred an additional $50 million USDT (approximately 69.4 billion won) to the same broker at an Italian grocery store.

However, once again, the crude oil did not arrive. The tankers waited aimlessly without even a scheduled loading date. Orlen ultimately recorded a loss of approximately 1.6 billion zloty (about 584.8 billion won) related to the OTS transaction, including advance payments and shipping costs for 2024. This was the largest loss in the history of Polish crude oil trading.

So, was it true that the oil payment that went from Orlen to Hanan was converted into Tether and delivered to the Venezuelan broker? Could tracking the flow of Tether recorded on the blockchain provide a way to recover the money? Polish judicial authorities are closely examining this case.

The 'Sanctions Relief' That Seemed Like an Opportunity

According to a report by the Financial Times (FT) on the 15th (local time), it all began in October 2023. The Biden administration in the U.S. temporarily eased sanctions on the oil and gas sector for six months after the Venezuelan government agreed to conditions with the opposition for the 2024 presidential election.

As the door to crude oil trading opened slightly, trading companies rushed in to secure cheap Venezuelan heavy crude oil. OTS was one of them. OTS was established by Orlen to reduce dependence on Russian oil and expand its international oil trading business.

The trading partner chosen by OTS was Hanan, a small trading company in Dubai that had been established for just over two and a half years. In November 2023, OTS signed a contract with Hanan to supply approximately 6 million barrels of Venezuelan heavy crude oil for $345 million (approximately 478.9 billion won). Just five days after signing the contract, they transferred $230 million (approximately 319.3 billion won) as an advance payment, which was two-thirds of the total amount. There were no collateral or bank guarantees.

The payment method was different from typical crude oil transactions. Due to long-standing sanctions, PDVSA had been excluded from the dollar payment network, leading to a practice of exchanging oil payments in the local market using the stablecoin Tether (USDT) linked to the dollar value. Hanan attempted to secure the oil through Rexco Energy, operated by a person who introduced himself as "an agent of PDVSA," and sent $30 million to a company called Goldmar International in December 2023. The plan was to convert this into USDT and deliver it to PDVSA through Rexco.

However, for some reason, the money did not reach PDVSA, and in the meantime, the final deadline for oil supply, December 19, passed. OTS urged Hanan, and Hanan pressed Rexco. Unable to secure the quantity through the existing route, Hanan ultimately headed to Caracas in January of the following year and directly handed USDT to a local broker.

Shipping Costs Alone Amount to 100 Billion Won

However, the local broker suddenly cut off contact after taking $110 million USDT. As it became difficult to secure heavy crude oil, OTS and Hanan turned their attention to other types of oil. This was an attempt by Hanan to reduce the debt owed to OTS through the transaction.

On January 26, both sides agreed to trade 1 million barrels of Venezuelan fuel oil. Hanan sought to secure the quantity through another broker. On February 25, they handed over $11 million USDT, and on March 8, they paid the same amount again. The total amount of money that Hanan delivered to local brokers through this was $132 million USDT.

It was not until March 8 of the same year that OTS was able to load about 500,000 barrels of fuel oil onto one tanker. This was half of the separately contracted fuel oil quantity. The initially promised 6 million barrels of heavy crude oil was never secured. While Hanan was hopping between brokers, costs ballooned. Even without the ships moving, charter fees and demurrage continued to accrue. According to internal estimates from OTS, the shipping-related costs incurred from the transaction with Hanan alone amounted to $72 million (approximately 99.9 billion won).

The maximum profit OTS expected from this transaction was $30 million (approximately 41.6 billion won). However, instead of profit, they ended up with astronomical losses. Ultimately, OTS, which had a change in management, terminated the crude oil supply contract with Hanan on March 28, 2024. Only then did the tankers leave Venezuelan waters.

Former Executives Indicted... Hanan Says "No Money to Return"

The Warsaw prosecutor's office indicted three former executives of Orlen and OTS on the 7th of last month. They are accused of failing to properly fulfill their duty to protect and supervise the company's assets and the group's interests, causing damage. If found guilty, they could face up to 25 years in prison. The prosecutor's office estimates the damage caused in three oil contracts they were involved in at approximately 1.5 billion zloty (about 548.2 billion won).

Investigative agencies are also tracking the process of purchasing digital assets with the money sent by OTS and where the funds flowed afterward. The focus is on the route through which money flowed from Orlen to Hanan and how this money was converted into Tether. It cannot be ruled out that someone from either Orlen or Hanan caused the delivery incident.

For now, Orlen is undergoing arbitration procedures to recover the $230 million advance payment given to Hanan. Hanan insists that it only played a role in mediating the purchase of crude oil between OTS and local companies and has no responsibility for the oil supply. David McCoy, a lawyer from the Abu Dhabi law firm ADG Legal representing Hanan, told FT, "Hanan is willing to have constructive dialogue with Orlen to resolve this matter amicably."

If Hanan's statement is correct, the movement of Tether that Hanan transferred to the Venezuelan broker should be recorded on the blockchain. Polish judicial authorities are searching for this trace.

Comments 0

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.