80% of the bitcoins Bukele announced he stored came from Bitfinex wallets

It is a company with a long-standing relationship with the government and has already been accused of lying about its liquidity guarantees. Several indications make it less likely that these crypto assets belong to the Salvadoran state. Opacity has obscured the condition.

President Nayib Bukele announced this in his country on Thursday. He also wrote an image corresponding to the addresses of those cryptocurrencies along with his words.

However, 80% of these funds do not come from the ecosystem of the government wallet Chivo Wallet, but belong to the company Bitfinex, whose background raises doubts whether these bitcoins actually belong to the Salvadoran state.

Bitfinex is directed by Italians Paolo Ardoino and Giancarlo Devassini, who have high influence in the government of El Salvador. He also participated in the formulation of the Digital Asset Issuance Law, approved by the Legislative Assembly in November 2022. Its parent company, iFinex, was accused of lying about its liquidity guarantees in the United States in 2021. Bitfinex was also announced as the company that will be in charge of the infrastructure for the long-promised Volcano Bond.

WATCH: El Salvador stores more than 5,000 bitcoins in “cold wallets,” according to Bukele

El Diario de Hoy verified the transactions linked to the address published by Bukele in X on the consulting website Blockchain.com. Traces of origin of funds were also compiled. Then, who they belonged to was identified through multiple sources, including the walletexplorer.com and bitinfocharts.com platforms.

Thus, it was possible to verify that only 20% of the Bitcoins transferred to that address came from the Chivo wallet ecosystem, that is, 1,121. The rest came from Bitfinex wallets, almost exclusively from the same address that appears to be the center of that company’s activity as the exchange (see image and explanation below).

The address published by Bukele was made on March 12, 2024, i.e. 2 days before the announcement. The first transaction recorded in it was those of 1,121 Bitcoins coming from a Chivo wallet, which, however, did not arrive directly, but through a bridge shipment to another address of an unknown owner. This was done on the same 12th March.

Then, another 5 transactions occurred with which the Bitfinex wallet sent its 4,569 bitcoins. The first, of just 1 Bitcoin, was recorded on March 13 at 3:04 pm. The last one, which brings together almost the entire total with 4,008 Bitcoins, was on March 14 at 3:32 pm, that is, just two hours before Nayib Bukele made his announcement at 5:50 pm X.

Because the entire Bitcoin project has been managed by the government with the most complete ambiguity, this is the first time that the President has published an address where, presumably, the Salvadoran state’s millionaire investment in Bitcoin is placed.

“It is impossible to be certain that those 5,000 Bitcoins belong to the Salvadoran state, especially given that the majority comes from Bitfinex. Maybe the people who left the Chivo wallet are from the state, but even there we can’t be sure because we have no way to verify,” comments economist Rafael Lemus.

What was transferred from the government wallet comes from Chivo’s “hot wallet”, i.e. the address through which platform users make their current transactions. This means that some part of those Bitcoins may belong to citizens and one of the possibilities is that, with this movement, the Chivo wallet has been deactivated.

Is it reasonable to think that more than 5,000 Bitcoins belong to the Salvadoran state, that is, to all Salvadorans? In this regard, the technologist Mario Gómez, who suffered illegal detention by the National Civil Police (PNC) in September 2021, exposes a hypothesis, originally published on his account at the address that Bukele Published so they had something to show.

“It’s like I’m sending $10 to the account of someone else who has more money and I’m passing off those details as my own. Neither the supplier, nor the quantity, nor the dates match what was allegedly purchased, Gomez wrote in X.

The address from which Bitfinex sent the money is a monster with a total amount of 285 million bitcoins in seven years. More than 4,000 people sent to the address mentioned by the President appear to be realistic given the sheer volume.

El origen de casi todos los envíos al presunto fondo de El Salvador 

Si bien son varias las direcciones pertenecientes a Bitfinex involucradas en los envíos, un porcentaje cercano al 100 % proviene de una sola, la 1Kr6QSydW9bFQG1mXiPNNu6WpJGmUa9i1g. Creada en agosto de 2016, registra 431,484 transacciones, con un volumen total de 286 millones de Bitcoin. Conforma el centro de la operación de Bitfinex. Abajo, capturas de la dirección en blockchain.com y bitinfocharts.com.

Why are accounts not linked? The same President published it and said that it is not an official source.

The most disturbing thing is that on the morning the President published the data, there was an error in the page, because it was copying the totals, so it inflated the number of Bitcoins, showing that there were 3,144, whereas the correct Was 2,762.

Bukele published graph with error. Did the President Not Know How Many Bitcoins He Acquired? Who else can know the real information besides him? Questions also arise as to how the state managed to acquire an additional 2,000 bitcoins in just three months.

Complete transparency of Bitcoin in the government of El Salvador

Over the past two years, the only information related to the project were purchase receipts from Bitso Company, which were posted to Bukele’s X account on June 30, 2022. That day, he announced the purchase of 80 Bitcoins. The same company also thanked Bukele for purchasing the first 200 units on September 6, 2021, when the law making crypto assets legal tender in El Salvador began.

These purchases from Bitso were verified in the Elliptic database by El Diario de Hoy, a company dedicated to risk analysis in cryptocurrencies, and Chivo wallet transaction verification service provider.

Since this is the only data published, it is not possible to find a contract in which Bitfinex is identified as the holder of the cryptocurrency invested in Bitcoin from El Salvador, especially if it is taken into account that this company operates It was authorized in the country from October 24, 2023, according to the National Commission for Digital Assets (CNAD).

And the economist José Luis Magaña makes this point of the highest seriousness: that there are so many doubts about the management of such a large fund.

“The real discussion about Bitcoin in El Salvador is not whether it exists or not, or whether profits are being made. First of all, it concerns the use of public funds. None of this has been done with private money, but with public money to the exclusion of other priorities. If that money is there, those $400 million, then why is UES still in debt? Why are funds for health and education being cut? Why has money been taken from the pension fund? The state’s responsibility does not lie with Bitcoin, it is to guarantee the rights of the population. “We should not just take the discussion to where the government wants it to go,” says Magana.

“This Bitcoin issue is a very risky bet. And this is even more so when a country’s finances are involved. Therefore, citizens must know all the details of those transactions: amounts, purchases, losses… If that trace is lost, we are talking about a ghost account. In any country with a serious government, this would already be banned. This is not happening in El Salvador. They are not private funds that can be used judiciously. Especially when the original funding comes from a loan that was not intended for that purpose,” comments Manfredo Marroquín of Acación Ciudadana, the Guatemala chapter of Transparency International.

A large part of the Bitcoin project was financed through a $200 million loan from the Central American Bank for Economic Integration (CABEI), which came in to support medium and small businesses affected by the pandemic.

Anatomía de una transacción en Bitcoin

Las transacciones en Bitcoin cuentan, corrientemente, con varias direcciones de origen y varias de recepción. Aquí le mostramos cómo se lee una de ellas: la de ID 6005f0d2a6494501f2bdc47ae05de749d5fa08042c28dd7db664ae51344f3904, de 5789 Bitcoins. En la imagen, se puede apreciar que hubo 19 envíos, pero solo de dos direcciones distintas, pues los primeros 16 corresponden a una y los últimos 3 a otra. Prácticamente todo lo remitido corresponde a la segunda, pues la primera solo envió $25. El monto de la segunda es de $402 millones, es decir 5,789 Bitcoins. Esta dirección (que comienza 1Kr6…) es la de una billetera de Bitfinex, según las webs walletexplorer.com y bitinfocharts.com, de referencia para este tipo de identificaciones.  Entre las siete que recibieron, a la que le correspondió el monto más grande fue la publicada por Bukele (que comienza 32ix…): 4,008 Bitcoins. Otras tres direcciones también recibieron montos importantes.

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