Poland's state-controlled energy company Orlen lost up to $424 million after a covert late 2023 deal to buy discounted Venezuelan crude oil using Tether (USDT) collapsed. Orlen Trading Switzerland sent a $230 million advance to Dubai-based Hannon International, which converted the funds to USDT and handed them over on USB drives in Caracas. The brokers disappeared, and PDVSA failed to deliver the oil. Three former executives face criminal charges, while Orlen pursues arbitration in Dubai.
Orlen USDT payment loss
- ▪Polish state-controlled energy company Orlen lost between $378 million and $424 million after a covert late 2023 plan to buy discounted Venezuelan crude oil using Tether (USDT) collapsed.
- ▪Representatives of Hannon International physically handed over private cryptocurrency keys controlling tens of millions of dollars in USDT on USB flash drives to local brokers in Caracas, Venezuela, in early 2024.
- ▪After the USDT transfers on USB drives, communication with the Venezuelan brokers stopped, and Venezuelan state oil company PDVSA failed to deliver the promised oil cargoes.
- ▪Orlen Trading Switzerland sent an uncollateralized $230 million advance payment to Dubai-based trading firm Hannon International to secure oil cargo allocations from Venezuelan state oil company PDVSA.
- ▪Orlen Trading Switzerland received only one vessel carrying approximately 500,000 barrels of fuel oil worth $28.8 million before canceling the contract in March 2024.
Cryptocurrency intermediary conversion process
- ▪Hannon International paid $400,000 in fees to a Dubai financial firm to convert an initial batch of funds into 80 million USDT.
- ▪A transfer of $135 million through an intermediary by Hannon International yielded only 85 million USDT, resulting in a shortfall of approximately $50 million.
- ▪The physical handoffs of USB drives containing USDT to Venezuelan brokers occurred between January and March 2024, including 60 million USDT on January 5, 50 million USDT on January 28, and 22 million USDT later.
- ▪Hannon International used multiple Dubai intermediaries and Venezuelan brokers to convert the $230 million cash advance from Orlen Trading Switzerland into USDT.
Venezuelan oil sanctions context
- ▪In late 2023, the United States government temporarily eased sanctions on Venezuela's energy sector, allowing buyers to purchase heavy Merey 16 crude oil at a discount.
- ▪Venezuelan state oil company PDVSA was largely cut off from Western banking networks, requiring buyers to make partial prepayments in USDT instead of standard wire transfers.
Criminal charges against executives
- ▪Polish Prime Minister Donald Tusk publicly condemned the Orlen oil deal, calling it a "disgrace in front of the entire world" and questioning the conversion of state funds into USDT.
- ▪Polish prosecutors have charged three former executives of Orlen Trading Switzerland, who face up to 25 years in prison over the failed oil deal.
International arbitration proceedings
- ▪Orlen's current management has launched international arbitration proceedings in Dubai to recover the $230 million advance payment from Hannon International.
- ▪Dubai-based trading firm Hannon International denied responsibility for the missing funds, stating it acted in good faith on instructions from Orlen.
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