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Salvadoran authorities urged to probe millions in bitcoin fraud

San Salvador, Feb 22 (EFE).- An NGO with ties to the Episcopal Church appealed Wednesday to the Salvadoran Attorney General’s Office to investigate the embezzlement of more than $12 million in public funds via the digital wallet app created by the government when it declared bitcoin legal tender nearly 18 months ago.

“Contracts and transactions declared secret, disabling of security mechanisms in the Chivo Wallet, identity theft and million-dollar diversions of public money by way of that app are some of the offenses that Cristosal is asking to be investigated,” the organization said in a statement.

Any probe should also seek to “establish the chain of command” directing the alleged criminal activities.

The request is based on investigative journalism supported by documents and statements as well as on “judicial proceedings in a United States court,” Cristosal said.

One of the accusations points to ostensible irregularities in the awarding of the contract to create the Chivo Wallet app, which President Nayib Bukele’s government offered to the public pre-loaded with $30 worth of bitcoin.

Cristosal also cited suspicions that “persons connected to the government” told the app developers to disable security mechanisms to facilitate identity theft.

As a result, according to the NGO, “20 percent of the user profiles created do not really belong to the registered persons, but to third parties who usurped their identities, causing the flight of more than $12 million in public resources.”

In September 2021, El Salvador became the first country in the world to embrace cryptocurrency as legal tender three months after Bukele’s allies in congress pushed through a bill authorizing the use of more than $200 million to finance the program.

While Bukele, a right-wing populist, touted bitcoin as a way to boost the pandemic-battered economy and benefit people who lack access to the banking system, survey results released last month show that use of bitcoin remained negligible in 2022.

The poll, carried out by the Public Opinion Institute at Central American University in San Salvador, found that 74 percent of Salvadorans did not use bitcoin at all last year, while 21 percent reported having used it once.

Since the launch in September 2021, the Bukele government has bought 2,381 bitcoin, announced plans to build “Bitcoin City” and issued $1 billion in sovereign bonds backed by cryptocurrency.

Construction has yet to begin on Bitcoin City and the government’s losses due to last year’s crash in the value of bitcoin are estimated at $70 million. EFE hs/dr

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