Bitcoin is not the biggest problem in El Salvador right now — it’s Bukele using the gangs to go as full dictator as he thinks he can get away with.
Bitcoin continues to be a problem as well, of course.
Cracking down
On Sunday 27 March, President Nayib Bukele demanded that the Legislative Assembly declare a thirty-day state of emergency over gang violence that led to 62 murders on Saturday 26 March.
Constitutional rights that were suspended include freedom of gathering and association, the right to legal defence, and the inviolability of correspondence and telecommunications. Suspects can be held for 15 days, up from 72 hours. [La Prensa Latina]
This is being enforced in Bukele’s standard style: flashy action for the cameras, and not so much attention to details.
With 12,000 arrests so far, there are many reports of apparently arbitrary arrests to meet quotas. Four baristas at 1200 Café, an award-winning coffee shop, were arrested while wearing their work uniforms and were paraded about as criminals. The baristas were only released after the hashtag #1200cafe became a trending topic from people tweeting about their arrest. With the right to defence suspended, hashtags have been working better than lawyers. [Twitter]
There are also gang member arrests, of actual gang members, who are paraded around to show how effective the police are … and who then turn out to have been past activists for Bukele’s Nuevas Ideas party. [Twitter]
Bukele has threatened to starve those designated as gang members in jail. “There are rumors that they want to start taking revenge on random, honest people. If they do that, there won’t even be one meal in prisons. I swear to God they won’t eat a grain of rice, and let’s see how long they last.” [Yahoo! News]
Bukele has gone into open war on journalists in El Salvador, accusing them of having gang relatives and so on. El Faro wrote about the judge who freed an MS-13 gang leader who was to be extradited to the US. Nuevas Ideas accused the journalist of being linked to the gangs. [Expediente Público, in Spanish]
Here’s a new Bukele video that I’m calling “Triumph of the Shill.” It’s ten minutes, but you’ll get the idea in the first thirty seconds or so.
Nuevos soldados y policías para la #GuerraContraPandillas
New soldiers and police officers for the war against gangs. pic.twitter.com/s5G3g8vF8J
— Nayib Bukele (@nayibbukele) April 8, 2022
Bukele canceled his appearance at Bitcoin 2022 in Miami at short notice to deal with the state of emergency. [Twitter]
Let’s see if the state of emergency is lifted in a week.
How badly has Bukele screwed himself?
The state of emergency is being used as a public relations operation to distract from Bukele’s economic woes, as well as El Salvador’s ghastly murder rate.
After Nuevas Ideas gained a solid majority in the Legislative Assembly in the May 2021 elections, Bukele rammed through bills with no discussion and no notice, and spent money like water.
This made him popular with his base — but El Salvador uses the US dollar as its currency, and deficit spending has to be paid back in short order. The 2021 budget deficit was $1.417 billion. [Trading Economics]
Ricardo Valencia has written an excellent opinion piece in El Faro about how the war in Ukraine means Bukele has screwed himself with his bid for isolationism, and his fondness for what Valencia calls Vladimir Putin’s approach to propaganda. Extremist libertarians turn out not to be enough of a market. Valencia also thinks the prospective market for Bitcoin Bonds included a lot of now-sanctioned Russians. [El Faro, in Spanish]
(The local term for “troll farm” is “troll center” in English — a pun on “call centre,” one of El Salvador’s major industries.)
Carlos E. Vela at Elsalvador.com thinks much the same — the country is in debt, the World Bank and IMF won’t help, Bukele spends recklessly, and he thinks isolationism will work for him. Bukele is not letting this crisis go to waste. [Elsalvador.com, in Spanish]
(Vela suggests in this piece that Bukele orchestrated the gang violence as an excuse for the crackdown. This is a commentary on Bukele’s suggestion that the violence was orchestrated by the opposition, the local non-governmental organisations and George Soros.)
Liberty for me
Libertarians who aren’t so concerned about other people’s liberties continue to be honoured guests of the President. They have dinners with the government, and go for helicopter tours of the LaGeo plant in Usulután and visits to Bitcoin Beach. Government media came along to publicise the tours.
As well as Max Keiser, Stacy Herbert and Samson Mow (again), visitors include Mexican billionaire Ricardo Salinas Pliego, owner of TV Azteca, and Changpeng Zhao from the Binance crypto exchange. [Elsalvador.com, in Spanish; Elsalvador.com, in Spanish]
Don’t take me down to Bitcoin City
Samson Mow left Blockstream in March. His new company is called JAN3, and he wants it to build Bitcoin City!
JAN3 already has $21 million in funding. The funding round was led by Alistair Milne of the Atlanta Digital Currency Fund, Chun Wang of F2Pool and Max Keiser’s new fund, El Zonte Capital. [Medium; CoinTelegraph]
The Bitcoin Bonds, expected to be issued in March, still haven’t shown up. The government is probably busy keeping everyone safe with random arrests.
Crypto exchange Bitfinex hopes the Bitcoin Bonds will be just the first government and corporate bonds they issue, to raise funds from “crypto-focused investors.” Paolo Ardoino of Bitfinex told The Block that they regarded the Salvadoran bond as a “loss leader.” [The Block, paywalled]
Which non-sanctioned entities are going to buy El Salvador’s Volcano Bonds? “There is a ton of wealth that is outside the banking system and wants to remain outside it,” said “one industry executive who has experience of working with Bitfinex.” Does that translate to anyone other than “crooks”? [FT, paywalled]
Bukele says the delay in the Bitcoin Bonds is because the government is busy finalising the pension reform — where they nationalise the pension funds, which a lot of observers think is Bukele trying to raid the funds. [Twitter]
Paolo Ardoino has tweeted that “Bitfinex and Tether have set up a relief fund to help the families of the people affected by the pandillas in El Salvador,” to which they’re donating 25 BTC (about $1 million). No other details are available as yet. It’s reminiscent of Tether’s “Deltec Cares” initiative in 2020, which gave a similar lack of detail. [Twitter]
At the #bitcoinmiami2022 and ran into @mxgxw_gamma who was featured in @BitcoinMagazine! pic.twitter.com/H4jYiLOMlh
— Marc Falzon (@MarcFalzon) April 6, 2022
Mario Gómez with Marc Falzon at Bitcoin 2022
How about that Chivo Wallet, eh
Chivo, El Salvador’s disastrously failed official Bitcoin payment system, seems to have had several million dollars stolen from its US dollar float around 1 April.
Millions of dollars were transferred from Chivo to a bank. The bank notified the Fiscalia (attorney general), and the Fiscalia asked the bank to freeze the funds. The culprit was caught. The government has now asked banks to monitor large transfers to or from Chivo more closely.
There hasn’t been any official statement — but the sequence of events has been confirmed by two bank sources and one government source. The theft was covered up so that it wouldn’t be announced just before Bukele’s planned appearance at Bitcoin 2022 in Miami. [Twitter; Twitter]
This appears to be standard practice in El Salvador — Banco Agricola suffered a breach in 2021, and didn’t admit it until the rumours were all over Twitter. [Elsavadorgram, 2021]
There are rumours that Bukele will claim a Bitcoin “hack” — though the bitcoins are apparently in custody in BitGo. But claiming the BTC backing your liabilities was stolen is a time-honoured exit scam.
Chivo remains as popular as ever with ordinary Salvadorans. “He has $2.57 worth of bitcoin in his Chivo Wallet and the bus costs $0.50. But buses do not accept bitcoin — and it’s probably for the best. ‘If they accepted bitcoin it would be absolute chaos,’ he says. ‘It can take up to 15 minutes to pay. Imagine.'” [ABC]
Douglas Rodríguez, president of the Banco Central de Reserva (BCR), puts El Salvador’s total remittance income in January and February 2022 at $552.7 million and $572.6 million respectively, for a total of $1.125 billion. Of that, $19 million came in via the Chivo wallet — that’s 1.7%. [Elsalvador.com, in Spanish]
Mario Gómez was interviewed by El Diario de Hoy about the problems with Bukele’s Bitcoin scheme, and the crypto people who Bukele brought in to promote it. [Elsalvador.com, in Spanish]
Bitcoin Towers
Bitcoin Miami featured not one, but two, crypto-related apartment building projects.
Bitcoin Towers will be four 25-storey buildings to be built on beach sand in the Costa del Sol, La Libertad (near Bitcoin Beach) and La Unión (where Bitcoin City will never be built). [La Prensa Grǻfica, in Spanish; Elsalvador.com, in Spanish]
You can buy an apartment as an NFT. I’m presuming that the legal purchase of a flat as an NFT will be in the sense of not being as the NFT. [La Bitcoin Towers]
The renderings depict giant out-of-place alien monoliths putting their nearby villages in shadow.
There’s another apartment project on El Tunco beach, promoted by an NFT company called Fusso. The apartments themselves will also be marketed as NFTs. Fusso shows no signs of having existed before a month ago. [press release; Elsalvador.com, in Spanish]
Milena Mayorga, Salvadoran ambassador to the US, posed next to a Bitcoin Towers advertisement at Bitcoin Miami 2022. [Twitter]
The future of El Salvador is written with LiBerty, “B” of #Bitcoin, Beaches, and Beautiful people, and now also of La Bitcoin Towers, something never dreamed before September 7th of 2021.
Thanks for your trust in El Salvador, great project @tarek_kirschen! 👏 pic.twitter.com/aytisI00Dc
— Milena Mayorga (@MilenaMayorga) April 7, 2022
Update: the Troll Center has discovered this post! For some reason this post set them off, and not the past ten months of posts on El Salvador’s Bitcoin disaster, including three Foreign Policy articles. They are very upset that I’m not letting them poop all over my blog, and that I looked at their IPs as listed in the comments queue. Almost all US-based, too — Bukele now needs to import his astroturf. Keep posting, guys.
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Amazing. I mean, it’s a rendering of some buildings. Since you can make a rendering look like anything, not constrained by reality, I have to assume it was intentional that they made it look like the buildings are already in mid-collapse. How appropriate.
Love how the back ones are visibly skewed to the side. They clearly spent five whole minutes on this, and you can see every second of effort right there.
Grazie, David, per il tuo ottimo articolo.
Ti saluto dal Portogallo.
Ana Silvestre
What a disgusting article written to put down our country. This David Gerard can shout to the world how much of a failure Nayib is but he wouldn’t understand the support he is receiving from actual Salvadoreans LIVING in the country who appreciate his efforts. Some people, government leaders and “journalists” want El Salvador to remain a Sh*t country and it shows.
Had a pile of comments from the troll center. I’m letting this one through because the commenter implies they live in El Salvador, but the IP address, 73.84.11.110, is a Comcast residential cable connection in Florida. Of six comments in this style today, five have been from US home connections and one from Verizon Wireless in the US. Bukele even has to import his astroturf.
Please don’t say that salvadoreans living in the country support that clown we have for a president. I live in El Salvador and can assure you that everything in this report is true.
David Gerard. HOW MUCH SOROS HAVE BEEN PAYING YOU TO WRITE SUCH GARBAGE ABOUT THE BEST PRESIDENT OF THE WHOLE WORD . I’M VERY SURE YOU HOT PAID VERY WELL TO DEFAME PRESIDENT BUKELE.
HOW LOW CAN SOMEBODY GO FOR GREED !!
YOU SHOULD BE ASHAMED OF YOUR SELF !!
WRITING LIES…. NOBODY BELIEVE YOU GUYS!!
172.56.30.219, which is T-Mobile USA
another 18 comments of imported astroturf which read like work assignments
keep it up, guys
David,
I don’t know if you are aware of it, but Bukele has made his followers to believe that George Soros is paying the opposition to criticize his government. Nevertheless, these people don’t even know who George Soros actually and why Bukele is making that claim.
Unfortunately, no matter what Bukele does, a majority of salvadoreans still trust him and support everything that he does. Sad for my country but only the future will show to them how badly they have been scammed.
I’ve heard a bit about the evil villain Soros in the Bukele Cinematic Universe, yes
and his evil buddies at the IMF, evilly not giving Bukele more money to spend on bitcoins
George Soros is the Boogeyman for anyone leaning right. If you ever rad anything trump supporters and “conservatives” post on social media, George Soros comes out of their mouths way too much. I figure you have to have someone or something to blame so the simpletons who follow these politicians automatically sling blame against. That is why such things as “Let’s go Brandon!” is a thing here in the U.S. Sad really.
It’s more than that – Soros is well-known to be Jewish, and most of the right-wing opposition to him is not only because of his Open Society activities (which they don’t like) but because blaming The Jews is another way they stir up hatred and anger.
I believe him and I live in El Salvador. Bukele is a dictator, a clown.
I was a member of CISPES in the 1980s, and our little town took in many salvadorans who had been displaced by the civil war (one fought with weapons from and under the auspices of reagan). I went to San Salvador and had an American rifle shoved in my face by a member of the national guard. I was travelling with nuns.
I know the horrible experience salvadorans had at the hands of the D’Aubisson and Duarte. My heart bleeds for the wonderful people of that beautiful country.
this crypto bullsh-t is just another colonialist attempt to extract wealth out of el salvador, except this time instead of United Fruit et al setting up one latafundia after another, it’s max F-ing Keiser trying to get rich off of what middle class there is there. no one, not david, not me, is gleeful about bukele’s stupidity and avarice. we want el salvador to succeed, not be sucked into a ponzi scheme that will leave pain and suffering in its wake.
Hey David, long time follower here! Pay some attention on the new President elect of Costa Rica, Rodrigo Chaves.
Some of the people close to him are crypto morons, he is on the record about being open to Bitcoin and has the same narcissistic tendencies that Bukele has.
I see he ruled out Bitcoin speaking during the election itself, but I get the impression that the candidates were expected to say that, ‘cos everyone could see what a disaster it had been in El Salvador.
F-ck Bitcoin! What they need to focus on is fixing the infrastructure, making things better for their citizenry, bringing in jobs, fighting crime, and trying to make it safe so there can be tourism again. El Salvador had a lot of opportunities, and should use them to make itself better. It is sad when the citizenry fall into tin pot despots and think they are the only thing that can “save” the country. The left and right parties, much like here in the States, are straight garbage as well.
Thanks. Fantastic article. Glad I found you. Word of caution Bukele’s trolls are everywhere and they are dangerous. I am in the land of milk and honey and found a pic in FB of me with friends at a dinner party with the caption “terrorists collecting funds for the gangs”.