Kontigo, a Y Combinator Summer 2024 graduate that raised over $20M to build what it called a "USDC-smart neobank for Latinos," has lost access to its U.S. banking and payment infrastructure after partners including JPMorgan Chase, Stripe, Checkbook, and Lead Bank severed ties.
The cutoffs follow investigations into the startup's Venezuela operations, where it enabled U.S. dollar inflows converted to USDC stablecoins for local spending—a model that regulatory experts say created potential sanctions evasion risks under OFAC rules governing transactions in sanctioned jurisdictions.
Kontigo's pitch centered on crypto as an inflation hedge: self-custodial wallets, Bitcoin savings, debit cards, and local off-ramps using Venezuela's Paka payment rails. The company operated a licensed crypto exchange in Venezuela and claimed to serve customers seeking protection from hyperinflation. Customer testimonials highlight instant international payments and USDC savings as key use cases.
But a January 2026 investigation by Fintech Business Weekly detailed how Kontigo's infrastructure—which profited via foreign exchange arbitrage in hyperinflationary markets—relied entirely on U.S.-regulated financial institutions while serving sanctioned territories. Critics questioned whether the startup's product-market fit was essentially a compliance workaround rather than a sustainable fintech model.
This is the latest example of "de-banking" hitting crypto payment processors serving emerging markets. U.S. financial institutions have grown increasingly risk-averse around any crypto exposure to sanctioned regions, even when startups claim compliance frameworks are in place.
The trade-offs are real: Venezuela's financial infrastructure is broken, and remittances are vital for families. But U.S. banks aren't willing to bet their licenses on startups navigating OFAC grey areas, no matter how compelling the mission.
Kontigo's backers include Coinbase Ventures and Y Combinator. The company has not publicly addressed the banking cutoffs. The pattern here is familiar—ambitious fintech meets regulatory reality, and the infrastructure providers exit first.
For crypto remittance startups serving sanctioned markets, the question isn't whether the technology works. It's whether anyone will let you plug it in.