How a Silicon Valley startup became a crypto lifeline for Venezuela

The founders of fintech startup Kontigo eagerly embraced the Silicon Valley playbook: packing the company into a San Francisco home for a TikTok-ready hackathon; peppering their pitches with buzzwords about building a “neobank for Latinos”; and making outlandish claims about pioneering a Martian economy.

- Ben Foldy [e-mail]

The performance helped the tiny, boisterous cryptocurrency startup land a coveted slot in the prestigious incubator Y Combinator and, in December, raise more than $20 million from big-name Silicon Valley investors, including Coinbase’s venture fund.

But the recent U.S. military action in Venezuela has put a spotlight on a controversial aspect of Kontigo’s business: It became a conduit for moving money in and out of the heavily sanctioned Venezuelan economy.

Now, Kontigo is facing service cutoffs by banks and payment networks—including JPMorgan Chase, Stripe and Bridge—and fending off allegations that it has undisclosed ties to the now-deposed Maduro regime, which the company denies.

A spokesman for Kontigo declined to answer questions about the business, but said in a statement that the company is reviewing its practices.

“Kontigo is committed to expanding access to financial services to the underserved,” the spokesman said. “We are conducting an internal review and will share updates as appropriate. We are committed to complying with U.S. laws, including U.S. sanctions, and we are evaluating existing sanctions procedures and protocols with a view to enhancing them where necessary.”

Co-founded in 2023 by Venezuelan Jesus Castillo, who casts himself as a David on the verge of vanquishing the mainstream banking Goliaths, Kontigo says its 1.2 million users across Latin America and South America have moved over $1 billion through its platform. The app lets users exchange hard currency for dollar-pegged stablecoins so that users can make payments and interact with the traditional banking system.

Outside Venezuela, the company enticed investors by presenting itself as a platform for helping everyday Latin Americans facing hyperinflation. Inside the country, however, it became a route around American sanctions that sought to choke off key parts of the Maduro regime from the international financial system.