A Chivo wallet programmer has spoken out about the various issues that El Salvador's flagship cryptocurrency wallet faced in its early stages. Shaun Overton, who claims he was hired to help deal with the issues, has spoken about identity theft, money laundering issues and the technical issues he observed while working with the Chivo team. Chivo Wallet Issues Deconstructed Shaun Overton, a developer who was reportedly part of the Chivo Wallet team, has spoken about the various issues facing the flagship cryptocurrency wallet created by the government to support the use of Bitcoin as legal tender...
A Chivo wallet programmer has spoken out about the various issues that El Salvador's flagship cryptocurrency wallet faced in its early stages. Shaun Overton, who claims he was hired to help deal with the issues, has spoken about identity theft, money laundering issues and the technical issues he observed while working with the Chivo team.
Shaun Overton, a developer who was reportedly part of the Chivo Wallet team, has spoken about the various issues that the flagship cryptocurrency wallet, created by the government to popularize the use of Bitcoin as legal tender in the country, faced in its initial stages. The statements offered by Overton are part of a legal dispute between Accruvia, a software developer, and Athena Bitcoin, the company that was responsible for developing and operating Chivo Wallet replaced from Alphapoint in February.
According to local news site El Faro, Overton was brought by Chivo's team to deal with problems after the launch of the project, which was "on fire". One of the first problems had to do with the implementation of KYC (Know Your Customer) procedures, which allowed anyone to check in with a Salvadoran IP address and a Salvadoran ID document.
This led to a series of ID thefts that led to fraud as the application offered a $30 bonus for new signups. Overton explained:
We never determined the exact extent of the fraud, but we estimate that 10 to 20 percent of registered users were fraudulent.
El Faro estimates the fraudulently withdrawn amount to be more than $10 million, and legal proceedings are currently underway introduced from Cristosal in November on this topic.
The system also had more problems that affected its core functionality and allowed attackers to exploit these flaws. The wallet only updated the price of Bitcoin once per minute, a bug that allowed people to use other pricing sites to profit from the unreported price changes. Overton stated that this caused a “money bleed,” citing examples of users who started with $2,000 and managed to get $400,000.
He stated:
Since the Chivo Wallet ecosystem did not compensate for market risk, all of these people's profits came from the government of El Salvador.
Additionally, Overton confirmed that the Chivo Wallet team intentionally turned off the KYC filters when the system went down so that the app could reach its goal of 50,000 registered users, allowing people to transfer money to bank accounts without reporting it due to a bug in the app. Overton concluded that the app was “rife with fraud.”
What do you think of Shaun Overton's allegations about the problems Chivo Wallet faced in El Salvador? Tell us in the comments section below.
Photo credit: Shutterstock, Pixabay, WikiCommons
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