The El Salvadoran government-run crypto wallet, Chivo, has recently implemented freezing user accounts and demanding proof of the source of funds.
Some users who received funds from Wasabi Wallet, which utilizes Coinjoin technology to obscure transaction monitoring on the network, have been actively blocked.
Bitcoin Beach, the founder of the project, claims that this move is due to pressure from the US government to compromise user privacy.
Reports have surfaced about a local carpenter whose wallet had a $1,000 transaction frozen and was asked to provide evidence of the source of the funds.
The situation has caused users to worry that such problems will discourage people from using crypto, as banking transactions are subjected to less scrutiny.
Bitcoin is legal tender in El Salvador, with the government offering citizens services such as the ATM network and the Chivo mobile bitcoin wallet.
After the cryptocurrency market’s fall, several Salvadoran government wallet users struggled to withdraw their funds, while others complained about the loss of funds stored on Chivo wallets.
In April 2022, it was reported that only 20% of commercial companies in El Salvador began to accept bitcoins as a form of payment for their goods and services.
Recently, in late March 2023, President Nayib Bukele called El Salvador “the new land of free people” and invited foreigners to move to the country, promising safety and security.
In a tweet, the president posted a vintage American-style poster listing the advantages of being a citizen of El Salvador.