Glitches, Fraud and High Fees Upset El Salvador’s Bitcoin Chivo Wallet Users

The use of cryptocurrency as legal currency has been in force in El Salvador since Sept. 7, and in that period, user complaints continue to pile up.

According to the country’s treasury department, $30,000 in taxes have been paid with the virtual Chivo Wallet after the Ministry of Finance authorized the payment of taxes, including VAT, income tax and import duties, with bitcoin starting the week of Oct. 18.

“In order to make the payment, the user has to scan the QR code generated at the payment window,” the Treasury said in the statement, adding in a Tweet that “In our tax offices you can pay quickly and easily with your @chivowallet.”

But as tax payments are being made, ongoing failures have cast a dark shadow on the government’s widely anticipated bitcoin wallet and users are not holding back.

Users have fallen victim to scammers promising to solve technical issues on the platform and have lost significant amounts of money in the process. Other reported failures include Unique Identity Document usurpation, incompatibility with other wallets and ongoing technical maintenance.

See also: Reports of Fraud Mar El Salvador’s Bitcoin Journey

Following numerous complaints, including situations where citizens’ personal data have been stolen to get the $30 worth of free bitcoin Salvadorans receive for signing up for the wallet, several opposition parties, including ARENA, FMLN, Nuestro Tiempo and VAMOS have filed a citation asking the legal representative of the company, Chivo S.A. de C.V., to report to the Assembly to answer questions on the ongoing issue.

Users have also called out the government on the high commission fees charged with each transaction. “They are stealing our money,” a user wrote on social media, an accusation which some may say is not far-fetched given that when promoting the wallet, the government had said that there will be no cost to using it or commissions on sending or receiving remittances, making or receiving payments or converting bitcoin to dollars or vice versa.

As if that was not enough, the latest wallet-related complaints piling up are linked to the restriction Chivo has put on the wallet to curb a practice known as scalping. Information Technology expert and president of the Transparency, Social Comptroller and Open Data Association (Tracoda), Carlos Palomo, has said the changes go directly against the Bitcoin Law, costing users, who must wait a minimum of three minutes between bitcoin trades, a lot of money.

Read also: Technical Glitches Continue to Mark El Salvador’s Bitcoin Rollout

Chivo said removing the price-freezing feature was necessary because it gave users time to check bitcoin rates on other exchanges before deciding whether to sell or buy, thereby profiting illegally from bitcoin trades.

On the upside, sellers at the San Salvador Handicraft Market, one of the most important points for small business commerce in the country, have highlighted the opportunities that bitcoin payments via the state-backed wallet creates for small Salvadoran merchants.

Elsewhere, the government has taken advantage of a recent reduction in the price of the cryptocurrency to purchase 420 additional bitcoins at the cost of about $25 million, which the National Assembly pre-authorized.