Hackers compromise the Chivo BTC Wallet configuration system

Biggest hacks of this week - 15th August

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TL; DR Breakdown

  • Hackers are using El Salvadorans wallets through the new Chivo Wallet to commit fraud.
  • Hackers are also targeting the free bitcoin from the administration.

Recent reports have revealed that hackers are impersonating several El Salvadorans. Earlier last month, El Salvador made history by becoming the first economy to introduce Bitcoin (BTC) legal tender. 

The citizens were preloaded with a Bitcoin Wallet known as Chivo. However, the identity verification system is not functioning as expected. Someone or a group of hackers were stealing people’s identities before they could register. 

The hackers’ motivation came from the free bitcoin loaded on each Wallet. President Nayib Bukele had provided the $30BTC for each person to motivate its citizens to utilize the Wallet.

Chivo Wallet could have taken better planning

The introduction of BTC as legal tender seemed rushed. President Nayib Bukele supported the move noting it would bring in more investors to their economy. 

However, some individuals disagreed with his sentiments. In June, The International Monetary Fund noted that the move could raise constitutional and financial issues. JPMorgan further said El Salvador’s economy could see serious drawbacks because of the new Wallet.

One of the citizens, Cynthia Gutierrez, did not want to use Chivo because she wasn’t sure about it. However, a few days ago, she opted to try out the app. She knew hackers had begun operating wallets linked to their identity cards, which made her curious to find out about her Wallet.

When she entered her details to sign up, she was puzzled. She got a message indicating that she was already registered and linked to a wallet. 

Most El Salvadorans had also noticed the same issue when they tried to access Chivo. 

Sadly some citizens’ bank accounts have been linked with the app to withdraw funds through the Wallet. 

Collective lawsuit 

Rina Montti, the director of human rights research at Cristosal, said they had received numerous complaints. Montti said the organization had received almost one thousand complaints in one week. From 14th October, they got people reporting identity theft-related to Chivo.

Cristosal called upon citizens who had their details compromised to register on a form. The human rights group announced that it is working on a collective lawsuit. They will present it before the imposed Constitutional Chamber. 

“Cristosal will take legal action to represent citizens who have sent proof of their details being mishandled. Individuals have to send their complaint accompanied by their Unique Identity Document (DUI). Additionally they should send a screenshot indicating that their details have already been used in the Wallet. By doing this their application will be accounted for,” the statement dictates.

Chivo’s official website indicates the procedures of having an account include scanning both sides of a DUI. Additionally, facial recognition is also needed. 

However, several citizens proved that fraudsters had compromised the software. In a hilarious turn of events, someone used a cup in place of the DUI.

Acción Ciudadana, an organization that fights corruption in Guatemala, has been monitoring the complaints too. 

About a week ago, the organization filed a notice to the Attorney General. They took the step after the company’s senior directors discovered their identities had been compromised too. 

For now, there is a lot of tension among citizens. They are trying to figure out if the administration will bring solutions. They are eager to solve their challenges and ease their worries.

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Edith Muthoni

Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, cryptocurrencies, blockchain, and cryptocurrency investments.

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