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A programmer for Chivo Wallet has opened up about the various problems the flagship cryptocurrency wallet in El Salvador faced in its early stages. Shaun Overton, who claims to have been hired to help handle the problems, talks about identity theft, money laundering issues, and technical problems he observed while working with the Chivo team.
We break down the problems with Chivo Wallet.
Developer Shaun Overton, who was reportedly part of the Chivo Wallet team, discusses the various problems that the main cryptocurrency wallet, created by the government to popularize the use of bitcoin as legal tender in the country, faced in its early stages The remarks provided by Overton are part of a legal dispute between software developer Accruvia and Athena Bitcoin, which is responsible for the development and operation of the Chivo Wallet, which replaced Alphapoint in February.
According to local news site El Faro, Overton was pulledby Chivo’s teamto manage the “flaming” project’s immediate post-launch issues. One of the first problems involved the implementation of a know your customer (KYC) procedure that allowed anyone with a Salvadoran IP address and a Salvadoran ID document to check in.
As a result, the application offered a $30 bonus to new registrants, which led to a rash of identity theft and fraud. Overton stated.
The exact amount of fraud has not been determined, but it is estimated that 10-20% of registered users have been scammed.
El Faro estimates the amount fraudulently withdrawn at more than $10 million, and a lawsuit filed by Cristosal in November regarding this issue is currently pending.
The system had additional inadequacies that affected its primary function and allowed threat actors to take advantage of these flaws. The wallet only updates the price of bitcoins once per minute. This bug allowed people to use other price sites to arbitrage and benefit from unreported price fluctuations; Overton said this caused a “money drain,” citing the example of a user who started with $2,000 and managed to get $400,000.
All of these people’s profits came from the El Salvadoran government because the ChivoWallet ecosystem did not compensate for market risk.
Overton also stated that in order for the app to reach its goal of registering 50,000 users, the Chivo Wallet team intentionally turned off the KYC filter when the system broke down, allowing people to transact money in their bank accounts without reporting it due to bugs in the app The company asserts that this was not the case. Overton concluded that the app was “riddled with fraud.”
Image credit: Shutterstock, Pixabay, Wiki Commons
