Tracking the Source of El Salvador’s Bitcoin Reserve to Bitfinex

In a surprising twist, a recent blockchain analysis has tracked the origins of El Salvador’s Bitcoin reserve back to a single entity: Bitfinex, a crypto exchange led by Paolo Ardoino and Giancarlo Devasini. According to the findings published by ElSalvador.com, all 6,111 of the 6,114 Bitcoins held in the address publicized by President Nayib Bukele in March 2024 can be linked to Bitfinex.

This discovery raises questions about the nature of the country’s Bitcoin holdings, especially given the lack of evidence supporting state-led purchases. The analysis shows that even the portion of funds initially thought to come from the government’s Chivo Wallet—1,121 Bitcoins—passed through it as a bridge, originating from the same Bitfinex wallet.

On March 14, 2024, Bukele shared a Bitcoin address on social media, describing it as a “cold wallet” intended to serve as a secure vault for El Salvador’s state-owned cryptocurrency. At the time, local outlet El Diario de Hoy reported that 80% of the funds stemmed from Bitfinex, with the remaining 20% tied to Chivo Wallet’s operational hub. A deeper dive into the blockchain now clarifies that this 20% also traces back to Bitfinex, having merely transited through the government wallet.

This intricate flow of funds came to light after tracking transactions from early March 2024, when Chivo Wallet’s consolidator address received 1,106 Bitcoins from intermediary wallets, ultimately sending 1,121 Bitcoins to the cold wallet just days later.

What’s more, the Bitcoins tied to Bukele’s “One Bitcoin a Day” initiative and purchases claimed after an International Monetary Fund (IMF) agreement, which bars the use of public funds for such acquisitions, also hail from Bitfinex. The only exceptions are three Bitcoins sourced from Binance in February, as noted by Arkham Intelligence. This overwhelming reliance on Bitfinex, a company with close ties to Bukele’s administration, casts doubt on the transparency of El Salvador’s Bitcoin strategy.

Bitfinex’s Deep Ties and Lingering Questions

Bitfinex’s influence in El Salvador extends beyond mere transactions. Ardoino and Devasini, who steer the exchange and its parent company iFinex, played a role in shaping the nation’s Digital Assets Issuance Law, passed in November 2022. Their involvement has fueled speculation about their sway over Bukele’s policies.

The company, once tasked with building infrastructure for the much-discussed Volcano Bonds, faced scrutiny in 2021 when U.S. authorities accused iFinex of misrepresenting its liquidity. Against this backdrop, the absence of receipts or public records verifying El Salvador’s Bitcoin purchases adds to the uncertainty.

Critics like technologist Mario Gómez argue that Bitfinex may have transferred these funds to Bukele’s publicized address to create an illusion of state ownership, a theory bolstered by the president’s delay in revealing the wallet, nearly three years after the Bitcoin Law’s passage. In contrast, economist Teo Sepúlveda of South Texas College suggests the purchases are real but shrouded in secrecy to avoid accountability. He posits that Bitfinex benefits significantly, potentially using El Salvador’s dealings to bolster dollar reserves for itself and its subsidiary company, Tether.

The IMF, which recently reaffirmed El Salvador’s pledge to halt public-sector Bitcoin accumulation, has been assured by the government that these “purchases” align with their agreement. Yet, with Bitfinex as the sole apparent source, the line between state action and private influence blurs. Whether this reflects a strategic partnership or a facade remains unclear, but the opacity surrounding the project continues to fuel debate about the true ownership and purpose, of El Salvador’s Bitcoin reserve.