El Salvador Limits Some Chivo Wallet Features to Prevent Fraud

El Salvador is taking necessary action to stop all those who have allegedly been misusing the new Chivo crypto wallet the country has implemented. Apparently, it only took about a month and a half for some people to resort to criminal activity to make their money via crypto.

El Salvador Is Taking Action Against Alleged Cheaters

The Chivo wallet is the new bitcoin wallet system that allows residents of the country to hold bitcoin, which they can then use to pay for goods and services. It also permits trading and selling, and many were allegedly using their wallets to engage in a process known as “scalping.”

A feature on the wallet would often pause transactions for up to a full minute prior to initiating the final confirmation. Thus, individuals had that time to quickly check out other crypto exchanges before their traders were finished. This gave them the chance to see what would be better for them at that moment: buying or selling. As a result, many traders were either seeing their asset surge thanks to ongoing rallies or they were buying dips.

This process, according to many regulators in El Salvador, would only be legal if there was no freezing feature. Given that the wallet was enabling the behavior, these regulators said that the wallet was being updated to disband the freezing option and open the door to fairer trades.

A representative of the wallet system explained on Twitter:

Unfortunately, many of our users used it for scalping, which is legal, but without the option of having a frozen price. Doing it with a frozen price, comparing it with other exchanges in real time is a type of fraud.

In addition, Douglas Rodriguez – the chief of the Central Bank of El Salvador – has stated that the Central American nation’s primary goal is to ensure that bitcoin is no longer viewed simply as a speculative asset, but rather as something that can potentially be utilized for legitimate purposes. The asset has been declared legal tender in the country. That means it must be accepted for goods and services by businesses like they would accept the U.S. dollar, which El Salvador has long been dependent on.

To ensure bitcoin takes this path, other trading features are being disabled as well. For example, customers can now only engage in limited trading (one trade every three minutes). In addition, the price at which bitcoin is often sold by these individuals is not the same as the price they receive when their transactions are fully confirmed.

Things Are Tough for People Trying to Do the Right Thing

Alexander Sermeno – a day trader and consultant in the nation’s capital – mentioned that these limits have made things hard for him to do his job and fully enjoy the wallet’s capabilities. He says:

It’s become really hard to trade, convert and even guarantee your money in dollars.

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