Kontigo has gained popularity by promoting a stablecoin-first banking model as a global alternative to traditional financial services.
At the same time, its rapid rise has raised skepticism in the crypto community. The model has led some discussants to ponder whether it can grow sustainably without repeating the sector's previous mistakes.
Kontigo's rapid rise is drawing attention
A new bank that builds its entire identity on stablecoins is rapidly emerging in the financial services sector.
Kontigo positions itself as a stablecoin-based platform that offers a self-custodial wallet. Users can hold their value in Bitcoin and use local stablecoins for payments based on these. All transactions are recorded on the blockchain.
On Tuesday, Kontigo's CEO Jesus Castillo announced that the company had raised $20 million in seed funding with the goal of building the world's largest bank.
Castillo described Kontigo as the world's fastest-growing stablecoin neo-bank. He stated that platform users can earn a 10% return in digital dollars, use a stablecoin-linked card with Bitcoin cashback, and invest in tokenized shares of U.S. companies among other features.
According to the management, Kontigo aims to expand the availability of basic financial services to nearly five billion people worldwide. Well-known institutional investors like Base and Coinbase Ventures support the company.
Although Kontigo has quickly gained a lot of attention, it is also associated with doubts. Some observers question whether Kontigo represents a familiar crypto industry narrative that has previously led to devastating consequences for the entire market.
No-KYC access raises warning signs
Kontigo has highlighted among several benefits that users can open an account and start transacting in USDC or USDT currencies from anywhere in the world without Know Your Customer (KYC) requirements.
On the surface, this solution may seem less bureaucratic, but it quickly raised concerns among users and industry observers.
KYC rules are designed to protect financial institutions from abuse. They require verifying identity and ensuring the legality of the customer.
If such protective mechanisms are absent, both financial platforms and users are exposed to greater risks such as fraud, money laundering, and financing terrorism.
In the crypto industry, the lack of KYC standards has previously proven harmful to users who have had to rely on insecure platforms.
Last week, Terraform Labs founder Do Kwon was sentenced to 15 years in prison for orchestrating a $40 billion cryptocurrency fraud. The Terra ecosystem operated without proper KYC controls, enabling massive capital flows anonymously and on a large scale.
When trust in algorithmic stablecoins collapsed, the lack of oversight accelerated the network's exploitation, weakened the transparency of asset movements, and increased losses for millions of users. This case demonstrated how the lack of basic security measures can turn rapid growth into a systematic collapse.
However, the lack of KYC standards is not the only aspect that has raised doubts about Kontigo's intentions.
Yield promises test user trust
Castillo clarified at one point that the 10% return on USDC investments is based on borrowing through the DeFi protocol Morphon, U.S. Treasury bonds, and custody or yield services offered by Coinbase.
Critics, however, pointed out that the calculations do not add up. This raised doubts about the reliability of Kontigo's promises. Returns from these sources are typically 3-7 percent per year, even combined in the current market situation.
Skeptics wondered how Kontigo could sustainably offer a 10% return. There were suspicions that there might be undisclosed risks, leverage, or opaque strategies behind it.
Meanwhile, another user reported that the USDC transfer was not credited to their wallet for several hours after the transfer.
On platforms that operate like banks or payment systems, even short delays in the availability of funds undermine user trust. Reliability and timely settlement are fundamental expectations regardless of the size of the transaction.
As Kontigo grows, its long-term credibility will be built less on promises of growth and more on execution and earned user trust.
In an industry that has a history of several failures, the company is now under pressure to show that rapid growth is possible without repeating the mistakes of past crypto collapses.
