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Failure in Chivo Wallet caused fraud of up to $24 million

A Guatemalan outlet publishes the revelations that a businessman made to a US court during the trial against the Athena company.

All the complaints registered on social networks by hundreds of Salvadorans who had usurped their identity to collect the $30 bonus on the Chivo Wallet platform, created by the government as part of the implementation of the Bitcoin Law, now have an explanation and a calculation of how much it involved in losses of public funds for El Salvador.

The revelations of the American Shaun Overton, owner of the company Roi Developers (also called Accruvia), to a United States court bring to light details that the government of Nayib Bukele has hidden about the multiple failures of the application.

A report published by the Guatemalan media outlet No Ficción, written by the Salvadoran journalist Moisés Alvarado, takes up the statements that Overton has given to the Northern District Court of Texas, in Fort Worth, in which he explains details that led to the fraud of between $12 and $24 million to the coffers of the Salvadoran State.

YOU CAN READ: Hundreds of DUI impersonation complaints by Chivo Wallet

According to the report, “at least 400,000 accounts created in the first weeks of Chivo Wallet, the government electronic wallet for bitcoin and dollars from El Salvador, were fraudulent, since they did not belong to the person under whose identity number they were opened.”

The application has been strongly criticized by computer technicians, economists and lawyers due to the flaws it presents, among them, one of the most serious has been the identity theft of hundreds of Salvadorans who have used their Unique Identity Document (DUI). ) without having downloaded it to their cell phones. Illustrative and non-commercial image/ https://twitter.com/mxgxw_gamma/status/1450417328995323904?t=nxP5VcWcBKan67pWEts5xw&s=08

According to testimony Overton gave to the court, collected by the publication, “we estimate that between 10% and 20% of all registered users were fraudulent. And the vast majority of that money had come from the Chivo Wallet ecosystem.”

The American, whose company was contracted by the Salvadoran government to repair the platform’s flaws between September and October 2021, explained that when he withdrew from the project the number of users of the application was more than 4 million, so which estimates that the theft through fraudulent accounts was between $12 million or $24 million, says the Guatemalan media.

Overton, who has sued US company Athena Bitcoin for alleged breach of contract because he owed it $83,698.91 for services related to the Chivo Wallet, told the court that “there was literally no oversight. Anyone on the platform could sign up and get $30”.

What was the fault? The businessman’s explanation is that the error was generated “when the Know Your Client system provider (Know your client) was blocked after the first 150 users were registered in the wallet. Those responsible for Chivo did not unsubscribe the system to fix the bug. They decided the wallet needed to stay online for new users to sign up, so they opted to eliminate the Know Your Client process entirely,” the post reads.

The KYC failure was precisely the one that the Colombian businessman Arley Lozano, responsible for the development of the Chivo Wallet application, pointed out as the main cause of the chain of errors that the platform showed and that basically refers to the verification of the identity of the person who registered to receive the $30 bonus offered by the government, according to a recent interview with the digital media Revista Factum.

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This process is what, according to specialists, prevents crimes of money laundering and terrorist financing, since it allows validating the identity of the person who makes the financial transactions.

According to the publication, Overton explained in the trial that his work on the software occurred at two different times: one contracted directly by the government of El Salvador, which lasted two weeks in mid-September 2021; and the other, by Athena Bitcoin, from September to November of that year.

Non-Fiction states that Overton was contacted on his personal phone to learn more about his testimony before the Court in Texas, but the businessman told them that “he was not authorized to speak to the media.”

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