The cryptocurrency service provider BitGo could have in its custody the 1,391 bitcoins (BTC) that El Salvador owns. At least that was what Matt Odell corroborated on December 31 when he took to Twitter to express his concerns that it is a United States company that has control of the funds of the Central American country.
Early december Odell Shipping a message to Salvadoran President Nayib Bukele from Twitter: “Dear President, is it true that a major company based in the States has the bitcoins of El Salvador?”
So far, the Bukele government has not answered the question that the renowned bitcoiner asks himself, like many other members of the community. However, an investigation by Odell confirm that indeed BitGo is the custodian of the BTC of the nation which last September enacted the legal tender of the pioneering cryptocurrency.
The fact that it is a North American company that has the keys to access BTC funds from El Salvador is something that worries many. This is because, being under the jurisdiction of the United States government, the nation’s crypto assets would be easily confiscable; forcing BitGo to cut off El Salvador’s access to its digital assets.
If you don’t have your keys, don’t count on your bitcoins
The phrase “if they are not your keys, they are not your bitcoins” is one of the golden rules of the adoption of the pioneer cryptocurrency. Therefore, it is a popular expression in the ecosystem. It means that, if a user does not have control over the passwords to their wallet, you are not really in control of your coins.
Anyone with access to the private key can have control of the funds of the public key to which it is linked. In simpler terms, a private key is similar to a password or digital signature to identify the true owner of the BTC stored in a wallet. When you talk about “not your keys, not your coins,” you are referring to a person’s private key.
That the first state in the world to adopt bitcoin as legal tender does not possess its keys or cede custody of its cryptocurrencies to BitGo, can be considered a foolish decision. Simply put, it means that the nation has entrusted citizens’ funds to a third party, which is also not your most reliable neighbor.
Some people cree what nayib Bukele is “playing with fire” by leaving custody of bitcoins of El Salvador in the hands of a United States company. Someone else does reference to what happened with the Venezuelan gold bars deposited in the vaults of the Bank of England, where they have refused to deliver it due to the sanctions imposed on the Caribbean country.
Similar situations already have a history in BitGo as reported by CriptoNoticias. In January of last year, the company was fined by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury after being accused of violating the sanctions imposed on several countries.
According to I DO IT, BitGo did not block access to citizens of sanctioned areas and offered its services to users in Crimea, Cuba, Iran, Sudan and Syria between March 10, 2015 and November 11, 2019. During that period, users accessed the company’s hot wallets and carried out “183 apparent violations of Multiple Sanctions Programs ”, for a total value of USD 9,130.
Given this, it is evident that, if at some point El Salvador becomes a country sanctioned by the United States, BitGo will have the obligation to cut access to its bitcoin reserves.