Abstract:
At the end of 2023, OTS, a Swiss subsidiary of Polish state-controlled energy group Orlen, tried to seize the window of the United States temporarily relaxing sanctions on Venezuela to purchase cheap crude oil. OTS's purchase advance payment reached US$230 million. However, due to difficulties in transferring funds through banks, Venezuela requested transactions through the USDT stablecoin, and the $230 million was subsequently converted into USDT.
For the sake of safety, the middleman stores the USDT wallet keys in different USB flash drives. The trading representative goes to Venezuela to contact the broker and hand over the USB flash drive containing the keys. However, most of the crude oil promised was not shipped, and Poland actually lost more than $400 million in this wave of purchases due to scammers.
Changed hands through multiple intermediaries:
After the outbreak of the Russo-Ukrainian War, Poland accelerated its transition away from dependence on Russian crude oil. In October 2023, the United States relaxed oil sanctions on Venezuela. On November 29 of that year, OTS Company signed a contract with Dubai trader Hannon International to purchase 6 million barrels of heavy crude oil, with a total contract price of US$245 million.
Within five days of signing, OTS paid US$230 million to Hannon International without requiring a mortgage or a letter of guarantee from the bank. Another US$100 million flowed to Dubai-based company Horizon Global. After the contract was signed, OTS began to require the parent company to prepare ships to go to Venezuela to wait for loading, and then there was an endless wait.
USD becomes USDT in USB flash drive:
OTS’s agreement with the Dubai company does not explicitly require the use of USDT for payments, but years of sanctions have squeezed Venezuela’s state oil company out of regular U.S. dollar clearing, so the company requires customers to use the USDT stablecoin for upfront payments. Hannon International then signed an agreement with the British Lexco Energy Company to be responsible for procurement matters. The customer's money was converted into USDT and a representative was sent to Venezuela. The USB flash drive containing the wallet private key was handed over to the local middleman/broker.
On January 5, 2024, representatives of Hannon International Company handed over a USB flash drive containing 60 million USDT wallet keys to the middleman, and then successively delivered multiple USB flash drives. There were many scammers among the middlemen who connected with Hannon International. Most of the middlemen lost contact immediately after receiving the USB flash drive. Petroleos de Venezuela stated that it had not received the corresponding payment, so it did not allocate a shipping window.
Tank tankers waiting empty continue to expand losses:
The very large oil tanker dispatched by the parent company of OTS was waiting in the waters near the Venezuelan port. Since the actual waiting time far exceeded the time stipulated in the berthing contract, this resulted in the oil tanker incurring high demurrage charges. The original 6 million barrels of crude oil were not shipped, and a middleman, possibly not a con artist, later purchased 500,000 barrels of fuel oil worth $28.8 million. Of course, this may also be because the scammers spent money to place orders to defraud more money in order to stabilize Hannon International.
By March 2024, the contract between OTS and Hannon International was terminated. After including advance payment, charter fees, and legal expenses, Polish officials estimated that the total loss would be as high as 1.6 billion zloty, or approximately US$422 million.
Executive sued and trying to recover advance:
Warsaw prosecutors last month indicted three former executives of Orlen, accusing them of failing to protect the company's assets while Orlen was seeking an advance payment through arbitration in Dubai, a matter that Polish Prime Minister Tusk said was an embarrassment to Poland.
Judging from the current situation, Dubai Hannon Company is probably an inexperienced trader. OTS Company directly signed a contract to transfer funds without carefully checking the other party's qualifications and past transaction orders, especially without asking for a mortgage or seeking a bank guarantee.
What’s even worse is that Hannon Company delivered the USDT key USB disk to the middleman instead of a bank transfer. That is to say, no one can even prove whether the USDT on the chain is legal. Of course, this batch of USDT has been transferred out and exchanged long ago. Hannon Company should bear all losses, but this company is simply unable to bear these losses.
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