El Salvador Bitcoin ‘Scalpers’ Force App Turnaround as Chivo Criticism Continues
The government of El Salvador has come under scrutiny again for its Chivo bitcoin (BTC) app and wallet – after its operators temporarily froze price viewing on Chivo to stave off “scalpers.”
In a series of tweets on Monday, the official Chivo Twitter account explained:
“We had to temporarily disable the option to see bitcoin prices frozen for one minute. Unfortunately, many of our users were using it for scalping.”
Chivo explained that some had been using the discrepancies between (one-minute) frozen rates on the app and real-time prices on other crypto exchanges. It wrote that opportunists were “taking advantage of that minute to compare rates with other exchanges, to see if bitcoin prices had gone up or down” and trade accordingly.
Trading “with a frozen rate, comparing it to real-time exchanges is a type of ‘fraud,’” Chivo wrote.
The app operator claimed that it would respond by abandoning the use of frozen rates and would re-enable “the display of the price of bitcoin for those who want to trade and even scalp,” but would do so “in real-time and not frozen rates – as it should be.”
“While making the change,” though, “the option to see the rate at the time of conversion will continue to be disabled,” Chivo wrote.
Although the app operator claimed twice that the “scalpers” had committed trading “fraud,” it pointed out that these individuals had not done anything illegal, and that their behavior was “legal.”
But some Twitter users bristled at the accusations of “fraud,” one of which was deleted, El Diario de Hoy reported.
One user complained, in the replies to the Chivo app tweets that “40 days after launch, the app still does not work” correctly.
Another smarted, asking:
“Where in the bitcoin law [of September 7] does it say that ‘scalping’ is fraudulent or criminal? This is very bad.”
On Reddit, one observer wrote:
“Having the ability to freeze the price of bitcoin in the app – of course people are going to use it to make money.”
Another wrote, with a touch of irony that the news was a “shocker,” as the government was “trying to regulate something that was designed to be decentralized.”
Meanwhile, the news agency EFE reported that 15 of its freedom of information requests to the state-owned Development Bank of El Salvador (Bandesal) have been turned down.
The news agency had asked Bandesal to reveal data about operations carried out in bitcoin using a fund approved by parliament. The fund, named Fidebitcoin, was set up in late August with an initial USD 150m. It has been used to buy reserve USD and bitcoin, and make conversions between the two forms of legal tender.
And an American bitcoiner has blasted the Chivo app, also in the pages of El Diario de Hoy. Garth Kiser (43), from Illinois, complained of how the app was not fit for purpose and had failed him and his friends in El Salvador on more than one occasion, racking up additional fees.
He stated:
“It’s not bitcoin that doesn’t work. It’s the app.”
A month ago, Kiser told the news agency AP a similar story about his frustrating experiences with Chivo bitcoin ATMs. In either case, while Salvadoreans need to use Chivo in order to get a USD 30 worth of BTC from the government, they’re free to use any other BTC wallet also.
____
Learn more:
– Corporations & Countries Watch and Learn From El Salvador’s Bitcoin Experiment
– ‘Identity Theft’ Criminals Plundering El Salvador Bitcoin Wallet Funds
– BitMEX Boss: El Salvador-style Bitcoin Adoption on the Cards for 5 More Nations
– Buoyant Bukele Blasts Critics as Bitcoin Price Booms and Salvadorans Buy BTC
