Kontigo pledges $340K reimbursement following stablecoin breach

Latin America-based fintech firm Kontigo announced on Monday that it will reimburse more than 1,000 customers who were hacked, following a loss of approximately $340,905 in stablecoins. 

The Venezuelan platform had earlier stated that it had acknowledged unauthorized access and acted quickly to secure its infrastructure and customers’ funds. It shut down systems that had been hijacked, activated its security procedures, and informed customers that they’d be compensated.

In posts on its official X account, Kontigo assured users that all affected funds are protected under the company’s reimbursement policy and confirmed full reimbursement for losses arising from the breach. Users impacted by the incident were instructed to contact support for personalized assistance.

Jesús A. Castillo, the firm’s chief executive, said in a separate statement, “We will resolve this in the next few hours; you can count on it.”

Kontigo’s CEO said they identified the hackers responsible

On X, Kontigo assured users again: “Kontigo will refund 100% of the affected amounts,” adding that the next update will be at 7:00 p.m. VE. In its earlier posts, the platform stated that its chief executive was among the affected individuals and urged those impacted to comment for personalized support.

It also reminded its users of common security precautions — fraudsters often use something like this to trick victims, and no sensitive data would be requested privately. Shortly thereafter, Castillo stated that the firm had tracked down the hackers and warned that there would be consequences, but he did not provide further details. He also noted that the platform serves as a dependable option for financial progress and stability — and would continue to do so even after the incident.

Launched in 2023, the platform has experienced explosive growth, with key partners adding over 1 million monthly active users and processing more than $1 billion in payments. It recently raised a 20 million dollar funding round, led by investors including Y Combinator. However, it also faced setbacks when JPMorgan Chase & Co. froze the platform’s accounts due to its connections to Venezuela, according to a report from The Information. Kontigo accessed JPMorgan through payments company Checkbook Inc.

Banks such as JPMorgan are expected to have clear visibility into their clients and the sources of their funds, or risk scrutiny from the SEC. And with Trump, leniency is not something many expect.

Kontigo allows users to save in USDC

Kontigo aims to offer a comprehensive app for individuals in emerging economies who face challenges accessing traditional financial services. The platform now lets users save in USDC, Circle Internet Group’s dollar-backed stablecoin, spend it locally, and invest in Bitcoin. The company also offers a USDC Visa credit and debit card that yields an 8% return.

Stablecoins are used to maintain stable values, often backed by US dollars, and are particularly attractive in areas where local currencies are unstable. A new breed of neobanks is allowing people throughout Latin America and Africa to start saving and spending money with stablecoins.

However, Kontigo’s incident raises questions about proponents’ assertions that stablecoins provide a safer place for funds than bank accounts. Banks in the United States are insured for $250,000 as part of their clients’ guarantees, and there’s no safety net for the clients of unregulated startups.

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