At the instigation of President Nayib Bukele, bitcoin (BTC) became legal tender in El Salvador on September 7, 2021. At the same time, the country launched the Chivo wallet, a wallet through which it was to experiment with the use of BTC by the people. But, instead of the excitement it generated in its early days, the Chivo project now inspires only desolation among Salvadoran users.
Many fraudulent transactions through the crypto wallet
On November 29, Ruth Eleonora López, lawyer and director of Cristosal’s anti-corruption program, did a revelation about the Chivo project, through a post on Twitter. Indeed, she said: The Salvadoran government was responsible for impersonating thousands of Salvadorans (over 400,000) and leading to fraud of over $12 million“.
The information comes from No-Fiction, a media outlet specializing in investigative journalism, based in Guatemala. No-Ficcion said: “At least 400,000 accounts created in the first weeks of the Chivo wallet (…) were fraudulent.Indeed, they did not belong to the person under whose identity number they were opened“.
He added : “This means that we stole 12 million dollars (…) from the coffers of the State“. It turns out that most Salvadoran citizens were only interested in the Chivo wallet for the reward offered when opening an account. Indeed, for each registration, the user was to receive 30 dollars in bitcoins.
A failure of the Know Your Client (KYC) process
No-Ficcion also revealed that the fraud on the Chivo wallet comes from a failure in the crypto wallet. Actually the KYC servicewhich was intended to verify the identity of users, was no longer functional.
A failure in this service has occurred just after the first 150 registrations. The Chivo developers had to suspend the use of the crypto wallet to fix the problem, which was not done.
Instead, the Salvadoran government opted to simply disable the identity verification system. This paved the way for various fraudulent actions, as anyone could now register.
Shaun Overton, owner of one of the companies that had to repair the various flaws in the Chivo wallet, made statements on the subject. He remarked in particular:There was literally no supervision. Anyone on the platform could sign up and get $30“.
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