The Government in El Salvador is facing scrutiny over its Chivo Bitcoin app and wallet once again. The scrutiny comes after operators temporarily froze price viewing on Chivo to stave off ‘scalpers’ who were using the app for their activities.
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.”
The firm then went on to explain that some users had been using the discrepancies between frozen rates on the app and real-time prices on other crypto exchanges. The account wrote that these users were “taking advantage of that minute to compare rates with other exchanges, to see if Bitcoin prices had gone up or down” and to then trade accordingly.
According to Chivo, this kind of trading is a type of fraud. The app operator claimed that it would respond to the issue by abandoning the use of frozen rates. The operator said that it would re-enable the price display for those who want to trade and even scalp but that it would do so in real-time and not at frozen rates.
Chivo wrote, ““While making the change,the option to see the rate at the time of conversion will continue to be disabled.” While the operator claimed that the scalpers had committed fraud, it did point out that the individuals had not done anything illegal and that their behaviour was ‘legal’.
Many Twitter users questioned the accusations of fraud. One user said, “Where in the bitcoin law [of September 7] does it say that ‘scalping’ is fraudulent or criminal? This is very bad.”
Crypto traders on Reddit also chimed into the conversation, sharing their thoughts around the app’s ability to freeze the price of Bitcoin. One user wrote, “Having the ability to freeze the price of bitcoin in the app – of course people are going to use it to make money.”
Meanwhile, news agency EFE reported that 15 of its freedom of information requests to the Development Bank of El Salvador have been turned down. The news agency had asked Bandesal to reveal data regarding operations carried out in Bitcoin using a fund approved by parliament. The fund has been used to make conversions between the two forms of legal tender (BTC and USD).
A month ago, Garth Kiser, from Illinois, complained to news agency AP about his frustrating experiences with Chivo. He argued that “It’s not Bitcoin that doesn’t work. It’s the app.”
