Venezuela Sues Website For Cyber-Terrorism



Venezuela Sues US Website Owners For ‘Racketeering’ And ‘Cyberterrorism’ To Try To Shut Them Up About Exchange Rates
from the oppressive-government-in-line-for-some-First-Amendment-education dept
Cyrus Farivar is reporting that the government of Venezuela has decided the best way to keep its citizens from learning more about its collapsing economy is to sue the US-based operators of a currency exchange information website… in a US federal court.
The US-based website that publishes a daily unofficial exchange rate between American dollars and Venezuelan bolivares has recently filed a vigorous defense in a strange international lawsuit. The site, DolarToday, was sued in October 2015 by the Central Bank of Venezuela (CBV) in federal court in Delaware, where the site is based.

In its bizarre and bombastic civil complaint, the US-based lawyer for the CBV argued that the three Venezuelan-American men who run the site are engaged in “cyber-terrorism” designed to create “the false impression that the Central Bank and the Republic are incapable of managing Venezuela’s economy.”
When corrupt and censorious governments engage in litigation, “bizarre” and “bombastic” are a given. It isn’t exactly deposed Panamanian dictator Manuel Noriega suing Activision from his jail cell, but it’s close. The opening paragraph of the complaint takes a purple swing for the prose fences.
How far will some go to enrich themselves (and their friends) and to regain the political power they crave to enrich themselves further? Would they go so far as to hurt their own countrymen by making their already challenging lives even harder? Defendants would. And they have.
What follows is revisionist history, a rose-tinted view of Venezuela’s future prospects as a viable nation state and lots of accusations with little evidence to back them up.

The Venezuelan government claims the real reason the website publishes exchange rates (that the government itself won’t allow anyone to publish) is not to inform Venezuelan citizens of the decreasing worth of their cash, but to overthrow the government. Or get rich trying.
Defendants are Venezuelan exiles living in the United States who virulently oppose the Republic’s elected leaders, but not out of concern for their countrymen. To the contrary, Defendants seek only to grab riches and power for themselves and their friends, willingly increasing the hardships of ordinary Venezuelans in the process. And in a ruthless exercise of realpolitik, Defendants seek to trick the Venezuelan populace that elected the Republic’s current government, hoping that voters will turn on their leaders, and blame them for the harm caused by Defendants.
Like many baseless lawsuits filed by censorious entities, the filing claims there’s a RICO violation in play here. Oh, and Lanham Act violations. Also: cyber-terrorism.
In taking these steps, 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. Among other things, Defendants’ actions are:
Exacerbating inflationary pressures that diminish the purchasing power of the Venezuelan people and the Central Bank;
Diminishing the value of the Central Bank’s seigniorage for the new currency it prints (or the coins it mints) or that it newly puts into circulation;
Depriving the Central Bank of the higher real returns that it would otherwise receive on monies it lends to other financial institutions and entities;
Causing trade to be withheld from the Central Bank, as capital that it would otherwise retain or attract instead leaves, with investors seeking returns from other world economies; and
Creating the false impression that the Central Bank and the Republic are incapable of managing Venezuela’s economy.
The operation of DolarToday is rather simple, at least in terms of establishing an exchange rate. (The constant creation of mirror sites to circumvent government censorship is a bit more complex.) An interview cited by the government’s filing indicates the site operators call up trading houses and ask for the current exchange rate without disclosing who they are or which site they work for. This precaution serves two purposes: to “prevent speculation” and to protect the owners of the site, because the Venezuelan government considers publishing anything but the “official” exchange rate to be criminal activity.

Because of this censorious activity, the DolarToday has become a trusted source for credible exchange rates, much to the government’s litigious chagrin.
The Central Bank is informed and believes and therefore alleges that the DT Rate has been the most widely read and followed exchange rate reference in Venezuela since 2013. News outlets – including respected ones such as CNN, CNBC, Reuters, and the well-known blog Venezuela Live Economic – have embraced the DT Rate as the authoritative “parallel” or “black market” exchange rate in Venezuela.

The large number of Venezuelan daily visitors to the DT Site, users of the DT App and DT Twitter followers demonstrates that many Venezuelans have likewise been led to believe that the DT Rate represents the “true” dollar-to-bolívar exchange rate. Indeed, the Central Bank is informed and believes that at least one million people – mostly in Venezuela – visit the DT Site (or one of its “mirror” sites) daily, making it one of the most visited websites in Venezuela.
The Central Bank claims DT’s owners have distorted the exchange rate on purpose to engage in currency speculation. And yet, other sources appear to agree that Venezuela is suffering from triple-digit inflation. The government could dispel these “rumors,” but it has never offered anything substantive to counter claims made by several news sites.
To the consternation of economists and anger of political opponents of President Nicolas Maduro’s government, the Central Bank has released no price data this year after inflation hit 68.5 percent in 2014, the highest in the world.

El Nacional cited the source as saying the annual rate could rise even further than the 180 percent range in 2015, given anticipated fourth-quarter price pressures.

If correct, the 16.9 percent inflation figure for September is the second-highest monthly rate in Venezuelan history, according to Central Bank data.

[…]

Central Bank officials said they could not confirm the figures reported in El Nacional. Nor did they know when official data would be given.

Most economists are predicting Venezuela’s inflation will be in three figures this year.
The Central Bank claims this is all the result of DolarToday’s deliberate misrepresentation of the true exchange rate. The site owners’ legal reps disagree with all of the government’s assertions.
Facing a national economic crisis largely of its own creation, the Revolutionary Government has censored the press and online media from publishing “negative” information about the Venezuelan economy, under the pretext that it is protecting the Venezuelan people from the damaging effects that negativity has on the nation’s economy. To be sure, the only thing the Revolutionary Government is protecting is its own slippery grip on power. The Complaint is just another “weapon” in the Revolutionary Government’s arsenal of censorship against DT, whose only “crime” has been to facilitate access to information to the general public. But, the Revolutionary Government clearly failed to calibrate its “weapon” before it fired it. Premised on implausible legal theories, the Complaint fails to satisfy even the basic jurisdictional and pleading requirements. For all of the reasons described above, the Court should enter an Order dismissing the Complaint with prejudice, and awarding Defendants such other relief as the Court deems just and proper.
The defendants also point out that it’s rather rich for an oppressive regime to avail itself of the benefits of an open court system simply to further its censorious aims.
[T]he Revolutionary Government has failed to silence DT, in large part, because DT operates in the United States where it may exercise its rights to freedom of speech and freedom of the press without reprisal. Put in the proper context, the Complaint is the latest salvo in the Revolutionary Government’s “war” of censorship and harassment of the press and media in Venezuela. Apparently, the Revolutionary Government believes that it will succeed in silencing DT by bringing the “war” to its doorstep. But, just like its previous efforts, the Revolutionary Government’s attempt to silence DT by filing this action in the United States must fail.

Almost ironically, the Revolutionary Government has availed itself of the open and “equal access” to courts afforded to litigants in the United States and filed a Complaint that contains legally deficient claims.
The response also points out that the Central Bank has no standing to pursue any of the claims, thanks to its willingness to conflate itself with the government as a whole as well as the Venezuelan public. Specific injuries must be claimed and limited to specific claimants, not just generally alleged and applied haphazardly to the nation of Venezuela, in whole or in part.
The alleged “injury” underlying all of Plaintiff’s claims is the purported “acceleration” or “exacerbation” of price inflation in Venezuela. However, “price inflation” in a nation’s economy is not an injury sufficiently “particularized” to the Central Bank, but rather, a generalized harm allegedly visited upon an entire nation’s economy and its people. This is manifest on the face of the Complaint which uses the terms “Central Bank” and “Venezuelan people” either conjunctively or interchangeably to describe the alleged “victims” of the “price inflation” allegedly caused by Defendants. Where, as in this case, a plaintiff asserts a “‘generalized’” harm that is “shared in substantially equal measure by all or a large class of citizens,” it will not have standing.

[…]

[N]owhere in the Complaint does it affirmatively plead any facts to support that conclusion, including whether its seignoriage has, in fact, been diminished, and, if it has, the value of any such diminution. Similarly, Plaintiff fails to plead any facts to support its assertions that Defendants’ conduct “robs” the Central Bank of lending or trade income, or the loss of “capital that it would otherwise retain . . . [to] other world economies.” Id. In short, Plaintiff’s alleged injuries are neither “concrete” nor “actual or imminent.” Plaintiff asserts broad, ambiguous, and wholly unsupported theories about the “economic and reputational” harm Defendants have allegedly caused, but nowhere in the Complaint does it affirmatively plead any facts to “nudge” those theories, in the parlance of Iqbal, “from conceivable to plausible…”
I don’t imagine this lawsuit will last long once a judge gets ahold of it. It’s obviously an attempt by the Venezuelan government to control the narrative on its financial woes — something it already does on the domestic front by forbidding anything but publication of the official rates and the use of three different exchange rates based on what the currency is being used to purchase. If nothing else, the First Amendment should have plenty to say in the defense of the accused website operators.


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Christopher Kemmett

Founder of The Real Strategy and Lowest Priced Advertisements.