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Investing.com – It’s been more than a year since El Salvador became the first country in the world to adopt the as legal tender. After a difficult start, President Bukele’s initiative seemed likely to be a success. In the meantime, the situation seems to have reversed, not only due to the fall in the price of bitcoin, but also due to the information that has emerged on the country’s BTC program.
The launch of the Chivo-Wallet, commissioned by El Salvador and serving as a central point for BTC payments, went anything but without a hitch. The developer of the wallet, Athena Bitcoin Global, had to hire an outside company to eliminate the existing errors. Texas-based software company ROI Developers/Accruvia took on the task. According to this company, Athena Bitcoin Global failed to settle an invoice for more than $80,000, which led to a lawsuit.
According to No Ficcion, this lawsuit revealed troubling details. The objective set by President Bukele of 50,000 registrations at Chivo on the day of the launch was in danger of failing. ROI told the court that the verification service set up had already crashed during the first 150 registrations. However, verification was essential, because each new user received a starting credit in bitcoins worth $30 from the government.
In order not to jeopardize the presidential campaign, the operator would have decided to deactivate the KYC process. It seems then that there was no longer any verification of the real existence of registered users. According to ROI, fictitious profiles were created with photos of users depicting potted plants, which was enough to get the $30 giveaway. The resulting damage is expected to amount to millions of dollars.
Some Chivo users have also found the wallet to be ideal for getting into day trading. According to the ROI, the BTC price was only updated once a minute, which paved the way for profitable arbitrage trades. It was enough to compare the price on the Chivo wallet with the current price from the data provider. We knew where the bitcoin price of the portfolio was in a minute and if it was better to buy or sell. There is also said to be a proven case where a user increased their wallet from $2,000 to $400,000. The sums thus earned had to be deducted directly from the State budget.
Then there was a bug fix that allowed for a 1:1 exchange rate on . Bargain hunters made 3,600 transactions with a volume of $180,000. The real value, however, was over $10 billion, “which immediately rendered the government insolvent.” Before payments could even be stopped, $250,000 went out of the system, according to ROI.
This all ended with Athena Bitcoin Global halting work on the Chivo wallet in December 2021. Instead, iFinex was tasked with taking over the administration of Chivo. At that time, President Bukele had already announced that he was building a “Bitcoin City” and issuing “volcanic bonds” worth $1 billion to realize this project.
According to No Ficcion, this is why iFinex now manages the Chivo wallet. iFinex is the parent company of stablecoins and cryptocurrency exchange Bitfinex. This is apparently an ideal mix to make Bitcoin Citiy and Volcanic Bonds a “success story” similar to the mind-boggling number of registrations when the wallet launched.
Last month, Bukele introduced a bill granting Tether rights similar to legal tender Bitcoin. The volcanic bond was already scheduled to hit the market last spring, but was postponed due to the war in Ukraine. Today, it is being talked about again, although interest from institutional investors is expected to be weak due to recent market turmoil.
No Ficcion nevertheless expects the bond not to be an object of sale, because iFinex has, through Tether, enough financial power to thank the president for the “trust” he has placed in it. granted. Tether has so far not released the collateral that backs the stablecoin. A good condition to covertly buy the volcanic bond with its 6.5 percent interest and strengthen its position in El Salvador.
Implementation could be imminent, as in January El Salvador needs $667 million to settle claims on a maturing loan. The country does not seem to have these means and has already filed a bailout request with the IMF, which rejected it.
Bitcoin: technical benchmarks
With a price of $17,322, bitcoin is currently recording a gain of 1.93 percent, while the weekly gain is 6.93 percent.
The cryptocurrency managed to break out of its recent range today, after several consecutive days of trading around the 23.6% Fibo retracement at $16,986. Today’s bullish move is supported by a daily close above the aforementioned fibo retracement.
The door is thus open for a test of the 38.2% Fibo retracement of $17,841. If it manages to sustainably break above this level, the next resistances will be at the 55-day MA of $18.312 and the 50 percent Fibo retracement of $18.533.
Only if the bulls fail to defend the daily close 23.6% Fibo retracement support should we expect a move lower towards the November 28 low, which lies at $16,013.
By Marco Oehrl