Venezuela Sues US Website Owners For 'Racketeering' and 'Cyberterrorism' to Try to Shut Them Up About Exchange Rates

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."

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.

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.

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 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.

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.

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.

[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 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...”