Crypto

Possible US sanctions against the Chivo app?

The United States could impose sanctions on El Salvador’s Chivo Bitcoin (BTC) wallet, according to statements by human rights organization Cristosal.

Tensions between Washington and San Salvador continue, and relations between US President Joe Biden and Salvadoran leader Nayib Bukele deteriorate month after month.

Source: Adobe / Oleksii

According to ElSalvador.com, the website of the newspaper El Diario de Hoy, Zaira Navas, Cristosal’s head of legal and security affairs, warned that the links between the state-owned company that runs Chivo and Carolina Recinos, the government’s chief of staff, “could result in possible penalties” for the app – and consequences for users.

Ms. Recinos is said to have ties to Chivo SA de CV, Mr. Navas said. This company would be in charge of managing the BTC and USD holdings of the Salvadorans who keep their funds on the platform.

Navas added that “one of the possible consequences” of Washington’s action could be “sanctions against Chivo in the United States for lack of transparency”, because “numerous failures” in the state portfolio “could be linked to corruption.”

Ms. Navas claimed that the $ 30 BTC given to Chivo users as a gift had been misused in many cases, and claimed that her own identity had been stolen by someone hoping to gain access to a BTC distribution.

ElSalvador.com reported that on September 16, 2020, Recinos was also appointed director of the Transmitter Company of El Salvador, Sociedad Anónima de Capital Variable (ETESAL), an electrical company that is listed as one of the owners of the Chivo application. Wallet and all government BTC vending machines.

Any action against the Chivo app in the United States could compromise the wallet’s function as a money transfer solution. About fifty Chivo vending machines are operational in the United States, where they are used primarily by Salvadorans abroad to send tokens to their families at home.

Milena Mayorga, El Salvador’s ambassador to the United States, said that in November alone, more than $ 32 million in remittances went through the state wallet.

As the application operates in the United States using the infrastructure of companies based in the United States, any move to limit the use of the wallet in the United States would be a blow to Chivo.

And there could be other problems besides remittances, warned IT scientist Mario Gómez, who allegedly said that US companies involved in providing services for Chivo could also be forced to withdraw.

He said companies like Amazon Web Services, which it said “presumably” provide services to Chivo, would likely bow to Washington’s will if sanctions were foreseen.

However, while Chivo has certain advantages for its users, Salvadorans can use any other BTC wallet to store, send and receive bitcoins.

Last week, the United States accused Bukele of negotiating a secret agreement with the leaders of two criminal groups, including the MS-13 organization. Washington believes that Bukele has reached an agreement with these groups to reduce violence and support the ruling party, New Ideas, in the upcoming elections.

Bukele has denied the allegations, but this is not the first time he has been accused of collaborating with MS-13. The US government’s response to perceived resistance from other regimes that refuse to comply with Washington’s demands, such as the government of Nicolás Maduro in Venezuela, has been to hit senior government officials with sanctions.

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