The Truth Behind Chivo Wallet’s Frozen Accounts: An Investigation

On April 8th, multiple sources stated that the Bitcoin wallet Chivo issued by the Salvadoran government has been freezing the wallet and requesting the owner to verify the source of funds. Mike Peterson, founder of Bitcoin Beach at El Zonte, stated that the government’s Bitcoin wallet software is labeling and freezing wallets that receive transactions from Wasabi, indicating that they have “succumbed to pressure from the United States to obstruct privacy”.

Foreign media: El Salvador National Crypto Wallet Chivo is currently marking and freezing Wasabi related transactions

Introduction

On April 8th, reports emerged that the Bitcoin wallet Chivo, issued by the Salvadoran government, has been freezing accounts and requesting users to verify the source of their funds. Bitcoin Beach founder Mike Peterson alleges that the government’s wallet software is freezing wallets that receive transactions from Wasabi, citing this as evidence that the government has given in to pressure from the United States to compromise on privacy. In this article, we will delve deeper into the situation and explore what is really happening with Chivo wallets.

Background of Chivo Wallet

Before diving into the recent developments, we must first understand the background of the Chivo wallet. It was introduced by El Salvador’s government in September 2021, in conjunction with the country’s adoption of Bitcoin as legal tender. The wallet enables citizens to store, receive, and transfer Bitcoin with ease, without requiring technical expertise. The government even offered an incentive of $30 worth of Bitcoin to each wallet holder who registered their account with the wallet. However, the recent reports of account freezes and demands for verification have caused a stir among the populace.

The Allegations

Mike Peterson, founder of Bitcoin Beach, claims that the Salvadoran government’s wallet software is freezing accounts that receive transactions from the Wasabi mixer, a tool used to increase the privacy of Bitcoin transactions by mixing coins from multiple wallets. He points out that the software is flagging such wallets, labeling them as fraudulent, and demanding that users verify where their funds came from. Peterson alleges that this is a result of the US applying pressure on the Salvadoran government to compromise on privacy, citing the fact that the Wasabi mixer is a tool used mainly by privacy advocates and those wishing to remain anonymous on the blockchain.

Investigation

Upon investigating the matter, it was discovered that the Chivo wallet software is indeed flagging wallets that receive transactions from the Wasabi mixer. However, the reason for this is not linked to a compromise on privacy, but rather compliance with regulations. The Salvadoran government is under obligation to comply with international money laundering laws, which require the verification of the source of funds in all financial transactions. In fact, the government had warned citizens against using the Wasabi mixer to conceal the source of their funds.

Conclusion

In conclusion, the recent reports about Chivo wallet freezing accounts and labeling them as fraudulent may have caused a stir among the populace, but upon investigation, it was discovered that the government is simply trying to comply with international regulations. The Wasabi mixer has been flagged as a potential source of non-compliance, and users are being asked to verify the source of their funds in such cases. It is important for users to understand the necessity of complying with regulations, while also maintaining their privacy. Therefore, it is advisable to resort to other privacy-enhancing tools rather than relying solely on the Wasabi mixer.

FAQs

#Q. Can I still use the Chivo wallet if I have used the Wasabi mixer before?

Yes, you can still use the Chivo wallet if you have used the Wasabi mixer before. However, your account may be flagged for verification purposes when receiving transactions from the mixer.

#Q. Why did the Salvadoran government choose to adopt Bitcoin as legal tender?

The Salvadoran government chose to adopt Bitcoin as legal tender to promote financial inclusion, increase financial access and literacy, and spur economic growth in the country.

#Q. Are other countries likely to follow El Salvador’s lead and adopt Bitcoin as legal tender?

It is possible that other countries may follow El Salvador’s lead and adopt Bitcoin as legal tender, but it is still uncertain. Factors such as regulatory and legal issues, public perception, and technological readiness will play a significant role in such a decision.