Trouble in Paradise as Identify Thieves exploit El Salvador’s Chivo Bitcoin wallet’s setup process

To the rest of the world, El Salvador is a trailblazer as far as crypto adoption is concerned. Not only was it the first nation to make Bitcoin legal tender but they took it a step further and are now exploring how to utilize volcanic energy to mine Bitcoin. Since then, Bitcoin has been massively adopted and used in the country. 


Many nations and crypto enthusiasts have commended the El Salvadorian president and parliament for this bold move. However, there seems to be trouble in paradise with hundreds of citizens reporting cases of hackers opening Chivo wallets with their ID numbers to claim the $30 Bitcoin incentive promised by Nayib Bukele’s government. 


Chivo is the digital wallet that the El Salvadorian government developed for the use of Bitcoin throughout the country. It was officially released on September 7th along with an incentive to encourage downloads. 

Figure: Customer next to the Chivo ATM (Source American Post)

Trouble in paradise

As one would expect, the decision to make Bitcoin a legal tender was welcomed with mixed reactions from the El Salvadorian citizens. Some were prompt to download the Chivo wallet immediately and get started on the Bitcoin journey. However, some needed more time to warm up to the idea. To this day, some citizens have no intention to download the Chivo wallet; they prefer the dollar. 


In August, polls revealed that between 65% to 70% of Salvadorans were opposed to the adoption of Bitcoin as legal tender. People took to the streets in protest for this move, however, it made no difference as the president was committed to the cause. When the president made an official statement that Bitcoin acceptance would not be mandatory, he left most citizens confused because the laws state otherwise. 


Bukele’s government must have anticipated some resistance to Bitcoin adoption so they provided a little incentive to motivate the citizens. For each download, a $30 Bitcoin incentive is given automatically. 


It wasn’t too long before people started complaining of hackers activating wallets with their ID numbers. It has been reported that when you enter your personal information, you get a pop-up message telling you that your document number is already associated with a wallet. Citizens are terrified that their data is being used for other illicit purposes. 

Figure: Pop up message that shows you have been hacked (source coinDesk)

El Salvadorans have been reporting such cases on social media and to local authorities since September. Last month, a human rights organization in El Salvador received over 750 identity hack complaints within 120 hours. For most of these cases, the individuals tried to activate their wallets after they learned of a large number of identity theft cases. 


Authorities are convinced that the hackers are motivated by the $30 worth of Bitcoin incentive that comes with each Chivo wallet. The government is yet to issue any official statement about the identity theft issue that is plaguing the country. 


If you look at Chivo’s official website, you will see that opening an account requires scanning the ID’s front and back and then performing facial recognition. However, Salvadorans have reported that the system is flawed. People have been able to open these accounts even with ID photocopies. The worst part is that for facial recognition, people have been able to use random images and still get through. The system is quite easy to fool, even the image of a coffee mug is good enough for the $30 worth of Bitcoin incentive. 


While Bitcoin adoption is a great step, it should not come at the cost of the citizen’s online security. El Salvador needs to take a fresh look into their system before they can push for Crypto mass adoption. 

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