Nayib Bukele’s tune has seemingly changed his stance on the International Monetary Fund (IMF). Bukele once laughed at its bankers causing a dip in bitcoin (BTC) prices, refused to consider repeated requests to revoke the crypto as legal tender, and angered IMF workers with various tweets.

He has also censored the IMF’s views within El Salvador and refused to meet its demands for debt refinancing.

However, yesterday, the president’s staff kowtowed to IMF demands, agreeing to confine his administration’s BTC-related economic activities and transactions, eliminate the acceptance of BTC tax payments, and unwind the government’s involvement with its once-state-backed BTC wallet and ATM network, Chivo.

Bukele made these compromises to get access to a paltry $1.4 billion loan extension to fund his administration’s reform agenda.

“IMF staff thank the Salvadorean authorities for the excellent collaboration and candid dialogue,” press officers wrote, juxtaposing Bukele’s defiant statements with his compliant acquiescence.

Salvadoran authorities also agreed to formalize a policy of voluntary acceptance of BTC as a method of payment for all Salvadoran business owners.

Bitcoin to no longer be accepted as legal tender for tax payments

In the end, it all comes down to dollars and cents at the negotiation table. Going forward, according to an agreement by Raphael Espinoza on behalf of Salvadoran authorities, US dollars would be the only acceptable denomination for tax payments in El Salvador.

Assuming El Salvador keeps the promises it has made to the IMF and implements these reforms by drastically dialing back BTC use in the country, the IMF Board will approve its $1.4 billion loan extension request in February next year.

Read more: Bitcoin makes IMF hesitant to issue new loans to El Salvador

The country’s GDP is approximately $34 billion and grows roughly 3% per year.

Because the country claims to own 6,192 BTC, Tim Draper claimed on October 24 that a rally to $100,000 per coin would allow the country to repay its IMF loans “and never have to talk to them again.”

That obviously didn’t happen. Like much of Bukele’s social media-posturing against the IMF, his debts came due and quickly checked him back to reality.

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Will a rising bitcoin price cure El Salvador’s indebtedness to the International Monetary Fund (IMF)? Earlier this week, Tim Draper claimed a rally to $100,000 per bitcoin would allow the country to repay its IMF loans “and never have to talk to them again.”

The claim sparked a discussion about how much debt El Salvador owns — and how much bitcoin can contribute to easing its burden.

With some generous math, Draper’s claim that $100,000 bitcoin would allow IMF repayment has superficial merit. Specifically, El Salvador owes 107.7 million SDRs to the IMF worth 1.35049 USD apiece.

In other words, the country owes approximately $80 million to the IMF.

Switching to the asset side of the country’s financials, El Salvador claims to own 5,913.76 BTC, each of which currently trades at $67,973.

So if BTC were to rally $32,026 and hit Draper’s $100,000 threshold, El Salvador would gain $189 million from its holdings, which is a larger number than its $80 million of IMF debt.

Read more: This Bukele lobbyist now works for Tether too

Draper’s claim passes an elementary math check. Yes, the literal profits from El Salvador’s bitcoin holdings if bitcoin were to rally to $100,000 would total more than its IMF debt.

However, Draper makes two massive assumptions that undermine his claim.

Why $100K bitcoin is not a cure-all for El Salvador loans

First, this calculation assumes that the country’s bitcoin are unencumbered — i.e. not already committed to other purposes or collateralizing other loan or contractual obligations.

Second, this calculation disregards non-IMF liabilities, which number in the billions of dollars. Draper simplistically assumes that the country will be able to remit profits from its revalued bitcoin holdings directly to the IMF without first paying off more senior creditors.

A quick fact-check reveals that both assumptions are difficult to reconcile with Draper’s claim that $100,000 bitcoin will somehow solve El Salvador’s indebtedness to the IMF, the world’s preeminent lender with $1 trillion in assets, or empower President Nayib Bukele to “never have to talk to them again.”

On the first point, El Salvador’s bitcoin are not unencumbered. Bukele has committed bitcoin to a variety of obligations, including geothermal plants, a new city, community and infrastructure projects, and even a private investment bank. El Salvador cannot simply give all profits from a price rally directly to the IMF.

On the second point, IMF loans are only a small portion of El Salvador’s sovereign indebtedness. Every year, the country refinances low single-digit billions worth of short-term debt and also owes a double-digit billions of dollars worth of long-term debt.

Comparing these massive figures to its IMF loans of just $80 million reveals the country’s significant indebtedness to non-IMF creditors. Although a price rally would obviously help boost the country’s assets a bit, it would probably take much more than $100K bitcoin to repay the IMF, let alone all of El Salvador’s other lenders.

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A hacker has published the source code, including .exe, .txt, .bat, and .reg files, for the software used within El Salvador’s government-maintained Chivo bitcoin ATMs. President Nayib Bukele’s administration paid third-party contractors from various countries to build and maintain its infrastructure.

Chivo has ties to Athena Bitcoin Global, a pink sheet stock that trades on the US OTC stock market. Athena rallied from $0.20 to $46.50 during Bukele’s Chivo announcements in 2021, however, today it trades for less than $0.10.

Other third-party contractors include ROI Developers (a.k.a. Accruvia) which sued Athena over an alleged failure to pay. Athena eventually stopped working on Chivo, and AlphaPoint, which has ties to various failed crypto exchanges, took over.

Read more: Bitcoin ATM startup sues former exec over botched El Salvador launch

Long history of Chivo wallet and ATM hacker leaks

It’s not the first, second, or even third time that El Salvador’s Chivo and ID systems have experienced a major breach. During Chivo’s debut in 2021, many Salvadorans stole other residents’ credentials to open multiple accounts and claim multiple $30 signup bonuses.

Earlier this month, a hacker published over 5 million high-resolution face photos of nearly every adult in El Salvador, including detailed contact information. 

A major newspaper in El Salvador also reported this month that the same hacking group, CiberInteligenciaSV, has been releasing a series of data dumps on Salvadorans for weeks. Recent breaches include 800,000 license plates and associated vehicle/owner info, 96,000 pregnancy records, 6,500 government customer records, and other catastrophic breaches.

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Personally identifiable information for more than 5 million Salvadorans has been available for free download since Saturday. According to the hacker responsible, this is the largest breach in the country’s history.

Disturbingly detailed information, including full names, birthdays, phone numbers, residential addresses, email addresses, and social security number-equivalent DUI numbers, has been stolen and made accessible via dark web torrents.

What’s even more worrying is the fact that the breach also includes millions of high-definition, unwatermarked, and DUI-numbered headshot photos of Salvadorans.

In fact, the breach affects the vast majority of Salvadoran adults. There are approximately 6.6 million Salvadorans, including children, including one-fifth who live abroad as diaspora.

The massive, 144GB data leak has been available to download for a $250 fee since August, but the threat actor who possessed the information claimed that the victims failed to pay his ransom demand. As punishment, the hacker released the data for free.

La Prensa Gráfica, a Spanish-language newspaper headquartered in El Salvador, confirmed the breach.

Read more: Ransomware gang wants 15 bitcoins from ‘world’s largest’ yacht dealer

New risks replace traditional violence in El Salvador

El Salvador is a dictatorship run by President Nayib Bukele who installed judges to modify the country’s constitution to allow himself to exceed the previously-unconstitutional presidential term limits. He has used various tactics to reduce once-rampant gang violence, including the extrajudicial imprisonment of 2% of the adult males residing in the country.

Bukele also approved the country’s adoption of bitcoin as legal tender to an English-speaking audience in Miami prior to even informing his Salvadoran constituency.

The country is also home to expansive operations by iFinex and its subsidiaries like Bitfinex and Tether. iFinex subsidiary personnel have been instrumental in crafting legislation, bond issuances, and financial schemes. Various bond issuances and governmental programs in El Salvador accept both bitcoin and tether from institutional investors.

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Nayib Bukele, the self-described dictator of El Salvador, recently revealed the address where the country is storing the lion’s share of its Bitcoin holdings, 32ixEdVJWo3kmvJGMTZq5jAQVZZeuwnqzo. 

This address reveals that El Salvador has more bitcoin than they had previously stated, and provides further insight into the relationship between the nation of El Salvador and the crypto exchange Bitfinex. A detailed review of the approximately 5,693 bitcoins in the cold wallet showed that 4,560 of these were received from an address believed to be Bitfinex.

The address has also continued to receive Bukele’s previously announced daily bitcoin purchases, which also appear to be coming from Bitfinex.

Bitfinex clearly plays an important role in the Bitcoin efforts of El Salvador, and El Salvador seems to be important for the broader ambitions of Bitfinex. El Salvador was the second country that Bitfinex Securities launched in.

Tether is also an investor in the “Volcano Energy” project in El Salvador; an ambitious plan to build a Bitcoin mining center powered by geothermal and wind energy. 

Bitfinex sister firm Tether has other connections to the government of El Salvador, including hiring DMM Consulting, a lobbying firm led by an advisor to Bukele. 

These transactions further illustrate the intimate relationship between the Central American dictator and the two globe-spanning cryptocurrency companies.

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President Nayib Bukele of El Salvador announced yesterday that the country is storing over 5,689 bitcoins in a cold wallet in a vault, revealing in the process that 4,560 of these bitcoins were received from Bitfinex.

Bukele shared the wallet address on X (formerly Twitter), claiming it was a “big chunk” of El Salvador’s bitcoin and suggesting that the country has more bitcoin stored elsewhere. The vault is dubbed ‘the piggy bank’ and Bukele claimed, “It’s not much, but it’s honest work .”

Read more: Did Bukele lie about El Salvador’s bitcoin profits?

Bukele claimed he transferred 5,000 bitcoin to the account, which now holds 5,689 bitcoin altogether. The figure exceeds the 2,864 bitcoin recorded by nayibtracker.com this morning, a website unaffiliated with Bukele that traces his bitcoin. 

He has previously referred to Nayibtracker himself to document his profits. In one instance, the tracker had to admit it was inaccurate in its reporting. 

However, Mario Gomez, a vocal critic of both Bukele and his bitcoin plans, has claimed that Bukele’s bitcoin purchase announcements do not correlate with transfers made to the El Salvador crypto wallet.

Bitfinex sent 4,560 bitcoin to the Bukele wallet 

Gomez alleges Bitifinex has been providing the country with bitcoin despite El Salvador claiming Bitso as its bitcoin custodian. In 2021, it was reported that Bitso worked with Silvergate Bank to facilitate US dollar transactions to a Chivo wallet holding El Salvador’s bitcoin.  

Indeed, Protos can verify using blockchain analytics tool Breadcrumbs that since March 13, roughly 4,560 bitcoins, worth just under $310 million, have been transferred from Bitfinex to the wallet shared by Nayib Bukele.

Translated using DeepL, Gomez claimed, “Literally, what [El Salvador] has done is what Tether does with their attestations: they move borrowed money into an account, pull the report and say ‘Look, you can see that there is money.’ Only with bitcoin instead of dollars.”

Read more: Bitcoin utopia El Salvador isn’t homicide-free, despite claims

He also claims that the crypto in El Salavdor’s Chivo wallet was never about ‘hodling.’ Instead, he claims the wallet has been circulating funds. 

In June 2021, Nayib Bukele made bitcoin the legal tender of El Salvador. In September of that same year, Bukele unofficially arrested Gomez. 

The activist previously linked a Chivo wallet proposed by El Salvador to a widespread Twitter hack involving a bitcoin giveaway scam and dozens of breached celebrity accounts. Gomez was detained without a warrant, accused of financial fraud, and returned to his home shortly after.

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El Salvador recently passed a new law that eliminates income taxes on foreign money coming into the country.

This news was announced on X (formerly Twitter) by Nayib Bukele, the self-described ‘coolest dictator,’  who has become a prominent player in the crypto ecosystem thanks to El Salvador declaring bitcoin a compulsory tender and investing public funds into bitcoin and bitcoin mining.

This change follows a recent initiative that will allow bitcoin investors to purchase a visa and eventually become eligible for citizenship in El Salvador. 

Read more: Did Bukele lie about El Salvador’s bitcoin profits?

Bukele is also known for his extensive ‘anti-gang’ crusade — an emergency decree was recently extended for the 24th time — and he has engaged in mass incarceration without due process. He has also been accused of a variety of human rights abuses. 

Bukele has asserted that he recently won re-election in El Salvador, despite a constitutional provision preventing him from being re-elected. The election was reportedly marred by serious issues, including mismarked ballots and a remarkably high turnout, but despite these problems, Bukele is set to remain as president of El Salvador. 

Fiscally, El Salvador has been struggling, defaulting last year on some pension debts. Many of the previously proposed remedies, such as the ‘Volcano Bitcoin’ Bond, have been delayed, forgotten, or reimagined. El Salvador has been relying on debt buybacks as a way to try to assuage these fears. 

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El Salvador’s proposed ‘Bitcoin City,’ the crypto-funded, volcano-powered, Bitcoin mining tax haven that was, according to the country’s president Nayib Bukele, “coming along beautifully” has apparently been canceled. Or never actually existed.

This is according to documents purported to be from the country’s Ministry of Public Works that were shared online early Thursday morning.

Despite President Bukele sharing a raft of architectural drawings, concept art, and details about what exactly would be included in the city (plazas, airport, and landmarks) back in May 2022, these most recent documents state that, “there is neither the Bitcoin City project nor is there knowledge of it.”

In other words, it appears on the surface that Bitcoin City has either had its plug pulled completely (it had already hit a number of snags) or it was never a thing in the first place.

When bitcoin hit the skids so did Bitcoin City

The circular Bitcoin City (designed to look like a giant bitcoin) was first announced in 2021 at the Latin American Bitcoin and Blockchain Conference.

Bukele subsequently announced plans to issue a $10 billion bond that was supposed to be invested half in creating the new city’s infrastructure and half in buying up bitcoin.

Read more: Bitcoin trackers reveal Saylor and El Salvador both rekt

However, since the plans were first made public, bitcoin has taken a battering. As a result, Bukele and his nation are down bad on their highly-publicized crypto investments.

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