El Salvador’s Embrace of Bitcoin Didn’t Bring Prosperity — It Rode in With Waves of Repression

Mario Garcia said it hurts to breathe. The tear gas tossed into his poorly ventilated, tin-roofed prison cell, where he was packed in with dozens of other men, took a while to disperse. He had pain in his side, broken ribs, and other internal injuries yet to be diagnosed. Garcia said he saw five men die in the 24 days he was imprisoned after an anonymous tipster accused him of being a gang member. But he’s grateful — to God, he said, and especially to his president, Nayib Bukele — that he’s free.

Garcia is a 46-year-old minutas, or shaved ice, seller in El Zonte, a beachfront community of a few thousand people in El Salvador that’s being aggressively rebranded as Bitcoin Beach. A potbellied man not much more than 5 feet tall, Garcia is used to pushing a cart through the sunshine, lugging around supplies, selling sweet ice treats to locals and tourists, including Bitcoiners, some of whom are buying up property in the area. Garcia was almost a Bitcoin Beach mascot, appearing in YouTube interviews, tweeted about by influencers, and featured in Diario El Salvador, a government-owned newspaper. Bitcoin Magazine, which has offered extensive, enthusiastic coverage of El Salvador’s use of bitcoin as legal tender, highlighted a sign on Garcia’s cart that read “aceptamos bitcoin,” calling the minutas seller and his wife “Bitcoin pioneers.”

But on April 11, police pulled Garcia aside in El Zonte. They stripped him down and checked his decades-old tattoos for gang signs (a faded one on his left hand reads, in English, “FUCK YOU!”), and he was arrested. After two days in police custody, he was taken to Mariona, the country’s largest prison. With no access to a lawyer or formal charges filed, Garcia was told he might be imprisoned there for years, even decades.

Civil liberties in El Salvador have been suspended in the name of fighting rampant gang violence.

Under the current state of emergency introduced by Bukele and his Nuevas Ideas party, civil liberties in El Salvador have been suspended in the name of fighting rampant gang violence. Now, people disappear in often arbitrary arrests, and families hear nothing. Prisons once open to visitors and journalists are closed shops. Police have triple-digit daily arrest quotas. The goal, as some Nueva Ideas officials have publicly said, is to arrest all of the supposedly 70,000 gang members in the country. In the first 10 weeks, an estimated 36,000 people were arrested, and according to the human rights organization Cristosal, at least 63 people had died in detention as of July 20, when the Bukele regime extended the state of emergency for a fourth time. Bukele said that the error rate for innocent people arrested was no more than 1 percent.


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After being falsely accused of being a gang member, Mario Garcia, a shaved ice vendor at Bitcoin Beach, was imprisoned for more than three weeks, during which he was tortured and saw five other prisoners die.

Victor Peña

Garcia was lucky to get out. Dana Zawadzki, a Canadian woman who owns a small local cafe and runs an informal vet clinic to sterilize the many stray dogs in the area, knew him, describing Garcia and his family as “very near and dear to my heart.” She worked with Garcia’s wife, Dominga, to start an online campaign in which they called for the local bitcoin faithful, some of whom are well-known online influencers with lines of communication to the Bukele administration, to oppose Garcia’s detention and to donate money to his family. Eventually the campaign attracted attention on bitcoin Twitter, where Bukele is a confirmed participant-observer. Weeks later, Garcia was mysteriously freed.

Messages to several Bukele officials, including his brother Karim, who occupies no government position but is a close adviser to the president, went unreturned. Attempts to contact the president via his preferred medium — Twitter — were unsuccessful, except in causing a minor Salvadoran social media flurry that an actor from the TV show “Gotham” was in town. (Ben McKenzie, co-author of this piece, played Commissioner Jim Gordon; Bukele has long referred to himself as Batman and tweets Batman memes.)


A woman carrying a child walks next to a sign displaying the acceptance of Bitcoin as a payment method on June 15, 2022 in San Salvador, El Salvador. El Salvador´s government has experienced losses of half of it´s $103 million US Dollar investement in Bitcoin as Bitcoin´s price fell to around $20,000 US Dollars. (Photo by Camilo Freedman/NurPhoto via Getty Images)

A shop displays a sign for the acceptance of bitcoin as a payment method on June 15, 2022, in San Salvador, El Salvador.

Photo: Camilo Freedman/NurPhoto via Getty Images

Outside Mariona prison, north of San Salvador, women arrive and await information on their arrested male relatives. An encampment has developed, with makeshift kitchens, bathrooms, and laundry stations. The women wait for people like Mario Garcia, who is one of many casualties of a recent political crackdown that Bukele imposed after a secret deal between the government and the country’s major gangs crumbled. Now, a clandestine detente has given way to government forces kicking in doors and stopping men on sidewalks to check their tattoos.

In street markets in San Salvador, El Faro reported, vendors have started to sell prison uniforms that people buy to send to their incarcerated loved ones. The prevailing narrative is that the mass-arrest policy remains popular — a recent Salvadoran newspaper poll found Bukele with an 86.8 percent approval rating. On occasion, the Bukele government declares — perhaps improbably — that no murders have occurred in the country for 24 hours.

The ruthless battle against gang violence accords with Bukele’s attempt to project a tough-guy image. After El Salvador’s president got into bitcoin, he began courting online personalities and cryptocurrency executives, referring to himself as a “cool dictator” and the “CEO” of El Salvador. There was hardly a bitcoin influencer with whom he wouldn’t pose for a photo. His government released lavishly produced, short promotional films that combined Hollywood-style production values with well-armed Salvadoran troops doing macho military stuff and taking down evil-doers — all at the command of their brave president.


SAN SALVADOR, EL SALVADOR - JUNE 01: President of El Salvador Nayib Bukele delivers a message to the citizens as he celebrates his third year in office at the Legislative Assembly of the Republic of El Salvador building on June 1, 2022 in San Salvador, El Salvador. Salvadoran President Nayib Bukele is celebrating his third year in office. (Photo by Ulises Rodriguez/APHOTOGRAFIA/Getty Images)

Salvadoran President Nayib Bukele celebrates his third year in office on June 1, 2022, in San Salvador.

Photo: Ulises Rodriguez via Getty Images

Despite the Salvadoran government’s occasional flair for marketing, the country faces enormous economic challenges, a debt crisis, constant struggles with crime and violence, a diplomatic row with the United States, and the mercurial rule of Bukele, who might be glibly described as a Salvadoran blend of Donald Trump, Filipino President Rodrigo Duterte, and an incredibly online bitcoin influencer. In 2021, Bukele reshuffled the judiciary, appointing new judges who then creatively interpreted the country’s constitution to allow a president to run for reelection. Filling government posts with relatives and friends from high school, Bukele runs El Salvador almost like a family enterprise. The business’s finances may be teetering, but with his policy of mass arrests and censorship laws targeting independent news outlets, Bukele appears determined to further consolidate power.

Looming over all this is the ongoing fallout of Bukele’s disastrous bitcoin project. In June 2021, at a video presentation at a bitcoin conference in Miami, Bukele announced that his country would be the world’s first to adopt the digital token as legal tender. On September 7, 2021, bitcoin was officially introduced in El Salvador to much propagandistic fanfare and some discontent, including social protests. That day, the global crypto markets crashed, with a number of exchanges unexpectedly shutting down. Numerous reports of fraud and identity theft followed; one local coiner told us that his friend used a photo of a dog to verify his identity. Rampant technical problems plagued the rollout of Chivo, the official wallet in which all citizens would receive $30 worth of bitcoin (whose value has since plummeted). Overall adoption has been minimal, with most people still preferring U.S. dollars, the country’s other legal tender. Nor has bitcoin proved useful with remittances, which are key to El Salvador’s economy: Less than 2 percent of remittances sent to El Salvador now use bitcoin.

The bitcoin project itself is run by a tangled mess of government and private interests, some of them foreign; few outsiders know who holds what or where. Bukele brags on Twitter that he buys bitcoin, using the state treasury, on his phone while sitting on the toilet. He’s never posted the wallet address he uses so the public can scrutinize these transactions, but if they’re real, he’s millions in the red. And so are his people.


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Wilfredo Claros has been told that he must leave his land to make room for a new airport that will serve Bitcoin City, Bukele’s promised crypto utopia.

Photo: Victor Peña

Wilfredo Claros lives with his wife, two children, and other family members on a small plot off an unpaved road in a verdant area low in the mountains around La Unión, a town in El Salvador’s east. Chickens, dogs, and one frequently annoyed turkey roam the property, where Claros built his cinderblock house. He feeds his family by farming, fishing, and plucking mangos that practically fall out of the sky. They drink water from a well and cistern system, which an earlier generation of family members built under the shade of Parota trees, a broad-canopied member of the pea family that yields a rich, caramel-colored wood. Claros credits its cool water with keeping his family healthy during the Covid-19 pandemic.

That’s for now, at least. Claros, like dozens of his friends, relatives, and neighbors, knows his land is set to be cleared and incorporated into a new airport to serve Bitcoin City. It’s still unclear how many people will be affected. The Salvadoran government hasn’t done a census in at least 15 years.

Bukele promises to turn a concept, which for the moment exists as a golden model on Twitter, into a physical city underwritten by crypto mining and geothermal energy — and tourism dollars. The government hasn’t adequately explained to locals why the digital currency is shaking up their lives, but they know this much: Some of them have to leave. Their land is needed for Bitcoin City.

No one we queried thought that El Salvador, a country about the size of New Jersey, needed another airport, except perhaps as a place to bring in private jets of crypto elites or anyone else favored by the regime. The planned future site of Bitcoin City is a sleepy, charming region with some beach and hiking possibilities for tourists, but there’s nowhere near the demand — or infrastructure — necessitated by an airport project. La Unión, which is a few miles from the Honduras border, is an unassuming coastal town that happens to be a hub for the regional narco trade. Cocaine passes through, some of it moving up the coast in the false bottoms of local fishermen’s boats. The mayor of the nearby town of Conchagua, who was living in Houston for 10 years before Bukele’s Nuevas Ideas party enticed him back to the country, has a brother who’s been accused of being a narco trafficker. (Overall, cocaine seizures have declined under the Bukele administration.)

Neither Claros nor his neighbors know when demolition day will come or where they’re expected to go. They don’t know why the area, full of flora, livestock, and a healthy community, needs to be bulldozed for an airport. There’s a sense of helplessness on behalf of locals, who share what little they know through a WhatsApp group. “We deserve information,” said Claros.

Claros emphasized the unfairness of his predicament, facing eviction without pretext and without much information. “I can’t go to Bukele’s house and claim his house and take it away,” Claros said. “I’d be shot. Why can that happen to me?”


Soldiers search for gang members during the state of emergency declared by the Salvadoran government, in Santa Ana, El Salvador, on June 30, 2022. - In response to a spate of 87 murders committed between 25 and 27 March, Congress granted a request by President Nayib Bukele to decree a state of emergency, which has been extended until at least the end of July, and has allowed more than 43,000 suspected gang members to be detained without warrants. Organisations such as Amnesty International and the NGO Human Rights Watch have questioned the procedures and called on Bukele to respect human rights. The US government has also expressed concern about

Soldiers patrol during the state of emergency declared by the Salvadoran government, in Santa Ana, El Salvador, on June 30, 2022.

Photo: Marvin Recinos/AFP via Getty Images

On March 26, at least 62 people were murdered across El Salvador — one of the most violent days the country experienced since its civil war, which began, by many accounts, with the 1980 assassination of the archbishop Óscar Romero and lasted until 1992. Thirty years later, the high death toll shocked the country of about 6.5 million, and Bukele’s government declared a state of emergency the following day. Under Bukele, El Salvador, in a rather short period of time, has exchanged the world’s highest murder rate for its highest incarceration rate. (With an estimated 2 percent of adults in prison, El Salvador now reportedly incarcerates more people per capita than the United States.) Bukele loyalists and many Salvadorans call the policy a success, at least from a public safety perspective, but questions linger: How was this supposed reduction in homicides achieved, and at what cost?

Publications by El Faro, Reuters, and the U.S. Treasury Department have offered answers, revealing that the Bukele regime, like some of its predecessors, had reached secret deals with the major gangs, which include MS-13, 18th Street Sureños, and 18th Street Revolucionarios. On May 17, El Faro reported on seven audio recordings of a Bukele official talking to gang leaders and lamenting a breakdown in relations. The recordings revealed backbiting among Bukele officials (who referred to the president as “Batman”) and wobbly relationships between the government’s designated negotiator and some of the gang leaders. They also unveiled prior close collaboration: a high-ranking Bukele official said he had personally pulled a gang leader wanted in the United States out of prison and taken him to Guatemala; the leader is no longer in government custody and has reportedly made it to Mexico. At the same time, the gangs saw the Bukele regime as guilty of betrayal when it promised safe passage to other gang members and then arrested them. The gangs’ outburst of ultraviolence — which targeted ordinary people, not just rivals — was their angry response, a vicious flexing of their power. The violence has since leveled off, by Salvadoran standards, but it also helped justify the government’s mass-arrest campaign.

El Salvador’s gang crisis is, by any fair assessment, a U.S. creation. After the U.S. supported El Salvador’s right-wing government, including in their massacring of thousands of civilians, during the 13-year civil war, waves of refugees flowed north. In Los Angeles, where many Salvadorans settled, some of the children of civil war survivors formed gangs like MS-13. In 1996, President Bill Clinton signed the Illegal Immigration Reform and Immigrant Responsibility Act, which broadened the eligibility of who could be deported and “fast-tracked” the expulsion of thousands of Salvadorans back to Central America. Gangs that had formed in LA blossomed in San Salvador, bolstered by existing economic and travel relationships between the diaspora and the Salvadoran homeland. Once a local gang for poor young Salvadoran refugees seeking protection and community in rough American neighborhoods, MS-13 gradually became a transnational criminal organization.


EAGLE PASS, TEXAS - MAY 21: Migrants from El Salvador walk through brush alongside the banks of the Rio Grande after crossing into the U.S. on May 21, 2022 in Eagle Pass, Texas. Title 42, the controversial pandemic-era border policy enacted by former President Trump, which cites COVID-19 as the reason to rapidly expel asylum seekers at the U.S. border, was set to officially expire on May 23rd. A federal judge in Louisiana delivered a ruling today blocking the Biden administration from lifting Title 42.  (Photo by Brandon Bell/Getty Images)

Migrants from El Salvador walk through brush alongside the banks of the Rio Grande after crossing into the U.S. on May 21, 2022, in Eagle Pass, Texas.

Photo: Brandon Bell/Getty Images

U.S. policies have been of little help since, particularly with their long-held emphasis on forcibly returning Salvadorans — including those fleeing gang violence — to El Salvador. Between 2013 and 2019, according to Human Rights Watch, 138 people who were sent back to El Salvador from the U.S. were killed. Others were raped and tortured.

Many Salvadorans, whether Bukelistas or not, understandably resent the U.S. for interfering in their country and fueling the gang problem. Wars against drugs and communism prioritized national-security concerns over genuine attempts to enshrine human rights and democracy. Cold War-era CIA complicity with right-wing Latin American governments and their murderous juntas still casts a long shadow. The U.S. has sanctioned top Salvadoran officials for corruption, and a bipartisan group of senators and congressional representatives introduced matching bills to “mitigate the risks” from El Salvador’s bitcoin adoption. (Neither bill has been passed into law.)

Measures like these have only deepened the diplomatic rift. “OK boomers…” Bukele, an elder millennial, tweeted in response to the proposed Senate bill. “We are not your colony, your back yard or your front yard.”

Relations were warmer under the previous administration: In 2019, Trump and Bukele met and laid the groundwork for an agreement, according to which some migrants who reached the U.S. to claim asylum would be deported back to El Salvador, because under its new president it was now considered a “safe” country, despite having the highest murder rate in the world. The overall goal was to suppress Latin American emigration (the Trump administration had similar agreements with Honduras and Guatemala). Bukele was glad to oblige.

But to stymie the free movement of Salvadoran people is to throw a wrench into their country’s primary economic engine. More than 2 million Salvadorans live in the U.S., and the money they send home to their 6.5 million brethren in the form of remittances accounts for as much as one-quarter of the country’s economy (El Salvador’s 2020 gross domestic product was a shade under $25 billion). That economy is primarily conducted in cash, with estimates running as high as 70 percent of all transactions using physical dollar bills. A similar percentage of Salvadorans (70 percent or so) don’t have a bank account.

With this financial backdrop, the introduction of bitcoin as an additional form of legal tender might, in a certain light, have made some sense. Almost every Salvadoran has a cellphone, and if they could figure out a way to use bitcoin instead of more traditional methods of transferring remittance money into the country (such as Western Union), and avoid the accompanying fees and volatility, it could be a game changer — especially for those government officials, businesspeople, and American crypto influencers who stood to profit off of the country’s bitcoin policy. But it was a long shot from the start.

Despite a reported $425 million spent by the Salvadoran government, the bitcoin project has not gone according to plan: After a botched rollout, bitcoin adoption is exceedingly low. The vast majority of merchants prefer cash, not only because it’s easier to make transactions, but also because many of them don’t understand how cryptocurrency functions, the bitcoin point-of-sale systems don’t always work, or they have no internet access.

Bukele essentially imposed bitcoin on the country by presidential fiat.

With little public debate, Bukele essentially imposed bitcoin on the country by presidential fiat. He once brought armed soldiers into the legislature to intimidate lawmakers and promised that iFinex, the influential corporate parent of crypto firms Bitfinex and Tether, would write the country’s new digital securities laws. As protesters took to the streets, the main Chivo bitcoin ATM in Plaza Gerardo Barrios, in the heart of San Salvador, was burned. Some activists we spoke with wondered if it was intentionally left unguarded. (It is now protected by soldiers, and workers there refused our requests for an interview).

Some original participants in Bukele’s bitcoin project — which was conceived by two of the president’s brothers while also involving a cadre of foreign bitcoin influencers, jurisdiction-less crypto executives, and Venezuelan political operatives — appear to have left or recalibrated their roles. The much-hyped “volcano bond” — which promised to raise $1 billion using blockchain and offered poor interest rates that made less financial sense than the direct purchase of traditional Salvadoran government bonds — was officially delayed on March 22. The next day, the Salvadoran government welcomed the arrival of Changpeng Zhao, the CEO of Binance, the world’s largest crypto exchange. He was accompanied by Brock Pierce, a Tether co-founder who has since become an industry power broker involved with many crypto companies. Also in town at that time were Ricardo Salinas, a Mexican billionaire bitcoin booster, and Samson Mow, an architect of El Salvador’s bitcoin project who has formed a company devoted to nation-state bitcoin adoption called JAN3. Months after their visit, El Salvador’s volcano bond is still on hold.

While still laser-eyed on Twitter, Bukele has lost some of his coiner bluster. During the recent, ongoing crypto crash, as bitcoin’s value nosedived, El Salvador’s president advised people to “stop looking at the graph and enjoy life.”

Less than two weeks later, he bought the dip, acquiring 80 bitcoin tokens for his country at a cost of about $1.5 million. “Thank you for selling cheap,” he wrote.


SAN SALVADOR, EL SALVADOR - JUNE 01: A protestor holds up a burning Nayib Bukele campaign shirt during a demonstration against the Nayib Bukele administration at the Plaza Salvador del Mundo on June 1, 2022 in San Salvador, El Salvador. Members of social organizations protest against the third anniversary of the government of President Nayib Bukele. (Photo by Kellys Portillo/APHOTOGRAFIA/Getty Images)

A protestor holds up a burning Nayib Bukele campaign shirt at the Plaza Salvador del Mundo on June 1, 2022, in San Salvador.

Photo: Kellys Portillo/APHOTOGRAFIA/Getty Images

Whatever happens to El Salvador’s bond offerings, the country has a grim macroeconomic outlook. The government owes about $800 million due in January of next year and risks defaulting on its sovereign debt. Earlier this year, ratings agency Fitch downgraded El Salvador’s long-term foreign currency issuer default rating from B- to CCC. Where will Bukele, who has mocked creditors like the IMF on Twitter, get the money? His finance minister recently promised layoffs of some public sector employees in order to free up resources. It may be a matter of time before the government defaults. If the economy collapses, Bukele may face political jeopardy.

Even so, his power base for now seems relatively secure. His Trumpian style of digital bombast, governing via tweet and taunting U.S. politicians for viral adulation, has attracted hordes of online fans. The gang crackdown is, for the moment, popular. The economy limps on, with bitcoin at least theoretically goosing tourism numbers and providing some glittery photo ops for a social media-addicted president.

Having already created an opening for a second term, Bukele has continued to chisel away at El Salvador’s civic sphere. In the face of government intimidation, self-censorship is rising among the press, with a new law warning media organizations of consequences for posting information originating from gangs. Journalists we talked to have been followed and photographed; most believed, often with some evidence, that their phones had been hacked (El Salvador’s government is a customer of NSO Group, the Israeli spyware vendor). Their family members have been threatened or fired from their jobs. Some journalists keep their passports on them, in case a quick escape to Honduras or Guatemala is needed. Others, especially on the political left, have already fled for other countries in the region.

Among Bukele’s most outspoken critics is Claudia Ortiz, a politician who has decried the president’s growing authoritarianism. She is the only representative that her political party, Vamos, has in the country’s legislature. Still, she might be the most viable presidential challenger to Bukele in 2024.

“Making bitcoin legal tender in El Salvador — it doesn’t seem that that decision was taken for the Salvadoran people,” said Ortiz. She said that the bitcoin policy was conceived by Bukele’s brothers and foreign crypto executives, like Jack Mallers of Strike. The bill itself was passed in the dead of night after almost no debate. That evening, Bukele took part in a Twitter Spaces meeting, touting, in English, his pending economic miracle.

“Who was he talking to? He wasn’t talking to Salvadorans,” said Ortiz, citing concerns from both constituents and economists that the bitcoin policy will serve the rich over everyday people.

A year after Bukele’s bitcoin law was passed, foreign investment was actually down in the country, said Ortiz. “The economic public policy, it’s a failure.”


Osmar Zelaya holds American flags in front of the LA Convention Center to protest against the President of El Salvador Nayib Bukele, in Los Angeles, California, on June 06, 2022. - Leaders from North and South America will gather in Los Angeles from June 6 through June 10 to meet for the ninth Summit of the Americas. (Photo by Apu GOMES / AFP) (Photo by APU GOMES/AFP via Getty Images)

Osmar Zelaya holds American flags to protest against Salvadoran President Nayib Bukele, in front of the LA Convention Center in Los Angeles, on June 6, 2022.

Photo: Apu Gomes/AFP via Getty Images

Seeking economic opportunity, some Salvadorans have tried to embrace one of Bukele’s signature policies only to fall prey to another — like Mario Garcia, who accepted the bitcoin future before getting thrown into a Mariona cell amid the gang crackdown. Zawadzki, the business owner who helped organize his release, wasn’t eager to criticize her bitcoin-loving neighbors but found it warranted given the circumstances. “We need to be a community, but if that’s the way [to free Garcia], then I’m all for it,” she said. “I just want this man out.”

It’s unclear who made the direct appeal to Bukele or someone else in his orbit. But the public shaming, and the quiet backchannels it might have activated, apparently worked. More than three weeks after he had been arrested, Garcia was sent back home by bus to El Zonte.

His family was of course relieved, but Garcia still requires treatment for some of his injuries. When we visited him in mid-May, we found his wife ill in a hammock on the property where they live with their two children. He walked gingerly and described himself as in pain, which has made it hard for him to work.

Wilfredo Claros, for his part, said his life isn’t without challenges, but he enjoys the kind of pastoral existence — working the land surrounded by family, God, community, and enough resources to get by — that makes for a contented life. At his property, relatives, some visiting from the U.S., like to stop by to drink coffee and talk for hours.

Claros proposed that the president could come visit and they could share a meal. They could chat, and he could help Bukele, a fellow man of faith, to find understanding. Claros, a fisherman who quoted parables about fishers of men, seemed to believe it was possible.

But he was worried about the ongoing crackdown against gangs and the inability to protest or voice political concerns. “I don’t want to go to prison,” he said. “I’m happy living here and eating the mangos that fall from the trees.”

The Parota trees, shading his decades-old family well, are now marked with an orange stripe: the government’s symbol designating them for removal.

According to Claros, “they’re destroying our homes, our livelihood, and our history.”

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