In Brief:Â
- Wallet users would not be able to see the price for trades in which price freeze is being used
- Feature that allows traders to freeze the BTC (Bitcoin) price for up to one minute.
- High-frequency traders exploiting Chivo’s frozen prices to arbitrage against real-time exchanges.
Salvadoran authorities have taken action to prevent users of their Chivo digital wallet from arbitraging its price-freeze function in order to make risk-free profits.
According to Chivo’s Twitter account, wallet users would not be able to see the benchmark price provided by the app for trades in which price freeze is being used – a feature that allows traders to freeze the BTC (Bitcoin) price for up to one minute.
Chivo stated that opportunistic traders use the price freeze feature to make money with arbitrage across cryptocurrency trading platforms during periods of significant volatility for Bitcoin.
Frozen price features allowed traders to take advantage of price differences in other exchange rates while using the lightning network to quickly move assets.
Nevertheless, Chivo claims that high-frequency traders exploiting Chivo’s frozen prices to arbitrage against real-time exchanges are committing “fraud” through their potentially “endless” profits.
Chivo plans to eliminate the price feature and offer real-time Bitcoin price references in its app in the future.
The number of Salvadorans exchanging U.S. dollars for Bitcoin seems to be increasing, Chivo had received 24,076 remittance requests worth more than $3 million on Oct. 14.
As part of El Salvador’s plans, Chivo’s Bitcoin trust profits worth $ 4 million will also be invested in building a new veterinary hospital in the country’s capital San Salvador.
