Poland's state-owned oil company Orleen lost hundreds of millions of dollars in a 2023 cryptocurrency scheme to buy Venezuelan oil, according to the Polish government's investigation. Orleen hired an outside company, Hannon, to arrange the purchase, and Hannon brought in UK firm Lexcor Energy, which claimed to have a Venezuelan office. The total lost and spent is pegged at $424m.
The structure of the deal required Hannon to convert dollars into the USDT stablecoin. Hannon exchanged $245m at several Dubai companies and added $15m of its own money. Only one of three transfers of $80m produced a full 80m USDT.
A $135m exchange returned just 85m USDT, leaving $50m unaccounted for, while a separate $30m exchange also disappeared and only partially returned much later. Hannon was left holding 165m USDT. Meanwhile, three Polish oil tankers sat anchored off Venezuela, accruing millions in demurrage and port fees because they had been chartered far longer than agreed.
Hannon's representative Kam Tse traveled to Venezuela with a colleague, carrying the USDT in cold wallets stored on USB sticks. They stayed in high-end hotels, used armored cars and bodyguards. Tse met numerous brokers claiming to represent Venezuelan state energy company PDVSA, a group a later local investigation revealed contained a substantial number of con-men, many of whom fled.
Tse's team handed 60m USDT in a USB wallet to a purported representative of local energy firm Synergy, and after weeks of waiting a Venezuelan office sent a picture of a claimed PDVSA export schedule listing all three Polish tankers at 1.9m barrels each with no loading date. The team then handed another 50m USDT on a USB wallet to Synergy's representative, who vanished. The running loss stood at $190m.
Tse later ordered 1 million barrels of a lighter oil blend, found it contaminated and switched to fuel oil under a contract. A $30m Dubai exchange returned only 21m USDT, and Tse paid Venezuelan firm Consulting Services 11m USDT for fuel. A confirmed 500,000 barrels loaded onto one ship, half the contracted amount, but a second 11m USDT payment for the remainder brought no delivery and no further contact. The cumulative loss reached $186m, with $72m in shipping costs and additional expenses bringing the total to $424m.
The investigation found the failure was not the blockchain itself, but the absence of official records tying wallets to people or entities, despite identity verification requirements at reputable exchanges. Almost none of the entities Hannon dealt with could prove their wallets belonged to them, and the brokers had advised Tse not to keep records. Pending Dubai court cases over the dollar-to-USDT exchanges face the same hurdle, since the legal system puts the burden of proof on the accuser.
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