El Salvador and the International Monetary Fund (IMF) are playing he-said/she-said over whether the country continues to purchase BTC tokens for its digital asset ‘treasury.’
On May 27, the IMF issued a statement detailing the global lender reaching a “Staff-Level Agreement on the First Review under El Salvador’s Extended Fund Facility Arrangement.” The arrangement includes a US$120 million loan the IMF is making the Central American country to shore up its wonky finances, part of a larger $1.4 billion deal the parties agreed to earlier this year.
The statement includes the following text:
“On Bitcoin, efforts will continue to ensure that the total amount of Bitcoin held across all government-owned wallets remains unchanged, consistent with program commitments, while also securing the unwinding of the public sector’s participation in the Chivo wallet by end-July.”
And yet, on the same day, the official X account of El Salvador’s National Bitcoin Office (ONBTC) tweeted, “EL SALVADOR JUST BOUGHT MORE BITCOIN.” The tweet indicated that El Salvador’s BTC treasury had grown by eight tokens over the previous seven days, boosting its total holdings to 6,190.18 tokens worth nearly $673 million.
So who’s telling the truth here? This is by no means the first time the two parties’ narratives on the country’s BTC position have diverged since they agreed to that $1.4 billion bailout, which came with certain conditions.
The IMF said that the deal would address “risks arising from the Bitcoin project, including … by confining public sector engagement in Bitcoin-related activities and transactions in and purchases of Bitcoins.”
But just a week after that deal was reached, El Salvador’s President Nayib Bukele tweeted that the country was “not stopping” its BTC buys. Bukele added that the buying “won’t stop now, and it won’t stop in the future.”
Theories abound as to what game El Salvador is playing here. One suggests that the government is simply shifting the BTC it already owns from non-public wallets to public ones in order to maintain the illusion of new BTC buys, thereby burnishing Bukele’s ‘rebel’ image.
The fact that the IMF isn’t cutting off Bukele’s fiscal lifeline suggests that those theories may have some merit. That in/out gambit would definitely comply with the IMF’s edict to ensure that “the total amount of Bitcoin held across all government-owned wallets remains unchanged.”
Others have noted that the ONBTC is a specialized administrative unit with a degree of autonomy, which might provide some legal wiggle room regarding whether or not the purchases are the government’s doing. But there are also questions about whether the government actually owns any of the BTC it claims to hold in its wallet (which we’ll get to in a second).
El Salvador’s Bitcoin dream turned into nightmare
Bukele’s enthusiastic adoption of everything BTC extends far beyond the government launching a BTC treasury. In 2021, El Salvador passed a law designating BTC as a legal tender and required retailers to accept it as payment for goods and services.
Then came the Chivo digital wallet launch, which offered US$30 worth of BTC to everyone who signed up and downloaded Chivo. The government also encouraged Salvadorans living abroad to file BTC-based remittances via Chivo.
The Chivo rollout proved an utter fiasco, with many individuals who tried to sign up discovering that inadequate controls meant someone had already claimed the $30 using their name. Retailers found the BTC wallet infrastructure not ready for prime time, leaving only those in the foreigner-dominated ‘Bitcoin Beach’ zone still accepting BTC payments.
BTC-based remittances accounted for just $28.8 million in the first four months of 2024, barely 1% of the total $2.64 billion remitted over that span. Worse, the BTC dollar total was lower than the $32 million sent home via Chivo in the first four months of 2023 and even lower than 2022’s $39.4 million (while the overall remittance total increased each year).
By October 2024, a San Salvador University survey found that 92% of 1,224 respondents weren’t using BTC to make transactions. That was a worse result than a similar study from 2023 in which 88% said they didn’t use BTC. Only 1.3% of Salvadorans thought Bitcoin should be El Salvador’s “main bet” for a prosperous economic future.
That same month, a Reason magazine author reported spending a week in El Salvador, during which he couldn’t convince a single retailer to process a BTC-based transaction.
There are many reasons why BTC failed to take off in El Salvador, including justified concerns about unsecure infrastructure. However, the fees associated with BTC transactions—currently standing around $1.50 after hitting $3.65 earlier this month—are simply too high for small-value transactions, regardless of where they occur.
Who watches the BTC watchmen?
The IMF’s February statement revealed that Bukele had (under pressure) made “acceptance of Bitcoin by the private sector voluntary and ensured that tax payments are made only in U.S. dollars.” El Salvador further pledged to “gradually unwind its participation” in Chivo and ensure that digital asset regulation/supervision was “enhanced in line with evolving international best practices.”
As stated earlier, the government also agreed to “confine government engagement in Bitcoin-related economic activities, as well as government transactions in and purchases of Bitcoin.” Bukele might quibble about the parameters of the word ‘confine,’ but defiantly throwing around scarce public money on speculative wagers while demanding international bailouts likely isn’t what the IMF had in mind.
El Salvador’s government has reportedly assured the IMF that its BTC ‘purchases’ don’t violate the terms of their agreement. This might be because the government isn’t actually buying any BTC, according to an eye-opening report by El Salvadoran journalist Moisés Alvarado earlier this year.
Alvarado noted that nearly all the 6,114 BTC tokens in the government’s possession as of March 2025 appear to have come from digital wallets associated with the controversial Bitfinex digital asset exchange. Moreover, there’s no proof that El Salvador is paying Bitfinex for these transfers or controls these tokens.
Alvarado detailed how 80% of the BTC in the digital wallet identified by Bukele as the government’s ‘cold wallet’ came directly from Bitfinex-controlled wallets. The other 20%—with the exception of three BTC that came via the Binance exchange—originated from Bitfinex wallets but took a circuitous route through the Chivo wallet before being transferred to the cold wallet.
Alvarado noted the lack of any public information on the origin of the state funds allegedly used to acquire these tokens. A similar dearth of public documentation confirms that the tokens in this cold wallet belong to the state. In other words, the BTC might still belong to Bitfinex.
Bitfinex, Tether no strangers to data debacles
Bitfinex is controlled by the same individuals behind Tether, the issuer of USDT, the world’s leading stablecoin by market cap. The two companies have deeply embedded themselves in El Salvador during Bukele’s time as president, helping to shape the country’s digital asset laws and regulations, leading to both firms receiving licenses under the new regime.
Bitfinex and Tether share executive DNA in the form of Paolo Ardoino, who is the CTO of the former and CEO of the latter. Both companies were co-founded by Giancarlo Devasini, who, along with Ardoino, has been hosted by Bukele at El Salvador’s presidential palace.
While Bitfinex is registered in the British Virgin Islands, it has made El Salvador the headquarters of a number of its subsidiary companies. In January, Tether relocated its corporate headquarters to El Salvador. Both Ardoino and Devasini have bought multi-million-dollar homes in the country, while Ardoino has gone one better and taken Salvadoran citizenship.
Tether has also voiced plans to build some kind of office tower in downtown San Salvador and claims to have active block reward mining operations in El Salvador (more on this below). All told, Bitfinex/Tether has made a pretty big bet on El Salvador and thus has a strong incentive to stay on Bukele’s good side.
To be clear, there’s no concrete evidence of any illicit quid pro quo between these parties, but both Bitfinex and Tether have previously been caught presenting one set of books to the world while hiding the real numbers out of sight.
Tether is also no stranger to questions over the fiat reserves backing its $153 billion in issued USDT. For a decade, Tether has promised that an audit is on the way but never actually delivered one, leading many to conclude that Tether knows something it would prefer the public didn’t know.
As for Bukele …
Volcano mining: hot or not?
Alvarado published another report earlier this month that poked holes in El Salvador’s claims of being a Bitcoin mining powerhouse.
Mining is a power-ravenous activity, so access to cheap electricity can mean the difference between profit and loss for block reward miners. Bukele has long touted his country’s vast supplies of geothermal energy, which is abundant, cheap and far more environmentally friendly than electricity generated via burning fossil fuels.
In May 2024, the ONBTC issued a triumphant claim that 473.5 BTC had been mined with El Salvador’s geothermal energy since September 2021. But Alvarado dug into these claims and discovered that there’s less here than meets the eye.
Alvarado maintains that the data contained in the mining tab of the ONBTC website “does not compile Bitcoin mining activity in El Salvador but rather consolidates information from different mining pools worldwide.”
Alvarado compared the website data referring to operations by the USA Foundry pool with data supplied by USA Foundry regarding its worldwide operations. Alvarado found the data to be “completely consistent, including the time and amount of Bitcoin obtained as a reward.”
Alvarado quoted an unidentified ‘crypto-asset expert’ saying the ONBTC website displays “no headline telling you it’s mining activity in El Salvador, but the government hasn’t refuted this confusion. It seems like some kind of propaganda operation.”
ONBTC is run by Stacy Herbert, wife of BTC maximalist Max Keiser, who advises Bukele on crypto matters. Keiser is also president of Volcano Energy, a company launched in June 2023 to mine Bitcoin via El Salvador’s geothermal energy. The government was to receive 23% of the company’s revenue.
At the time, Tether announced it would “provide capital and bring its domain expertise in energy, hardware, and communications to build Volcano Energy.” The following April, Volcano Energy claimed that mining would start this January. But to date, these operations have yet to commence. Volcano Energy’s website hasn’t posted any news updates since October 2023.
Last November, Bukele was once again talking up the vast opportunities of volcano-powered mining, suggesting operators could “rent” one of his country’s 170 volcanoes. Media reports dutifully repeated the earlier claims of the country having mined 473.5 Bitcoin.
So are Bukele, Bitfinex and Tether simply mythmaking here? Perhaps there’s no greater irony that the people who celebrate the concept of ‘don’t trust, verify’ seem incapable of verifying their fiscal claims. If you can’t stand the heat, get out of the volcano.
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