Is a U.S. website causing the collapse of the Venezuelan economy? That’s what Venezuela’s Central Bank seems to want to prove as it pursues legal action to shutdown www.dolartoday.com. The bank blames the website for runaway inflation and a plummeting currency.
On Monday, Adam Fox, a Squire Patton Boggs attorney who is representing the bank, said his firm plans to submit an amended complaint against the website after the U.S. District Court of Delaware dismissed the initial claim on Friday.
Started in 2010 by three Venezuelan exiles, DolarToday has drawn a huge following and the ire of the government by publishing the black-market bolivar-dollar exchange rate.
In a country where there are tight currency controls but also a thriving black market for greenbacks, the website has been a frequent government target. Starting in 2013, the administration tried blocking the site, and President Nicolás Maduro has often railed against its owners, calling them “bandits” and economic terrorists who need to be locked away.
In October, the Central Bank took the fight a step further by filing a suit in Delaware, where the website is registered, accusing the owners of racketeering, false advertising, and illicit enrichment.
According to the Venezuelan Central Bank, the website has been driving the country’s triple-digit inflation and currency devaluation by faking exchange-rate data.
“Defendants are deliberately misrepresenting and effectively manufacturing a market — a phony, distorted market for the exchange of bolivares into dollars and vice-versa, with the aim of lining their pockets with ill-gotten gains,” the suit reads.
In addition, the suit alleges, the defendants “conspired to use a form of cyber-terrorism to wreak, and in fact they have wreaked, economic and reputational harm on the Central Bank by impeding its ability to manage the Republic’s economy and foreign exchange system,” the suit claims.
The website’s owners say they don’t set the price of anything, that they simply report the exchange rate that’s being offered in Cúcuta, Colombia.
“We haven’t done anything wrong, we’re just saying what is true about the exchange rate in the parallel currency market,” said one of the defendants, who asked to go by the pseudonym of Benjamin for fear that the government might hound his family or friends in Venezuela.
Collapsing oil prices have meant Venezuela has fewer greenbacks coming in. And in a nation where almost everything is imported, dollars are in high demand. While the government’s official exchange rate is 10 bolivares to the dollar, and its (theoretically) free-floating SIMADI rate is 205 to the dollar, the black-market rate is running almost five times higher.
On Friday, the U.S. District Court in Delaware handed the defense a short-term victory, saying the Central Bank had not provided sufficient evidence that harm had been done. But the court also gave the bank seven days to amend its complaint.
Ricardo Gonzalez, a defense attorney with Greenberg Traurig in Miami, said the ruling proves that the bank’s claims have no foundation.
“The allegation that the mere publication of an exchange rate in the U.S. causes inflation in Venezuela — it’s pretty far-fetched,” he said.
Even so, Fox, who represents the Central Bank, said his firm would be filing the amendment before week’s end, saying it was simply a matter of drawing clearer lines between the harm that DolarToday had caused to the Venezuelan people and the bank itself. “We intend to address that distinction,” he said.
The defendants “have wreaked massive harm on Venezuelans in general and the Central Bank specifically with the misleading and fraudulent manner [they] have represented the exchange rate,” Fox said.
Benjamin said he fears the lawsuit is part of a broader government strategy.
“We’re worried, because the Venezuelan government knows that we haven’t done anything wrong,” he said. “They’re hoping that through a lawsuit, and the process of discovery, that they can identify our collaborators and shutdown our operations in Venezuela.”
The International Monetary Fund is predicting Venezuela’s inflation could hit 720 percent this year. And the shortage of even basic goods is raising tensions in the country. To complicate matters, the newly emboldened opposition has been floating ideas of how to oust Maduro.
Under the circumstances, the administration needs as many distractions as possible.
“We’re absolutely sure that the government will try to keep finding ways to wear us down,” Benjamin said.