Kontigo is gaining attention for its stablecoin-centric banking model, XEM it as a global alternative to traditional financial services.
At the same time, Kontigo's rapid growth has also raised questions within the crypto community. This model has led many to worry whether Kontigo can develop sustainably or will repeat the mistakes that have caused many previous projects to fail.
Kontigo's rapid growth has attracted attention.
A new bank, centered around stablecoins for all its operations, is gradually becoming a prominent name in the financial industry.
Kontigo positions itself as a stablecoin-based financial platform, offering autonomous wallet storage and asset management, allowing users to store value in Bitcoin and spend through local stablecoins, with all transactions recorded on the blockchain .
On Tuesday, Kontigo CEO Jesus Castillo announced that the company had successfully raised $20 million in a seed Capital round to realize its ambition of building the world's largest bank.
Mr. Castillo also asserted that Kontigo is currently the fastest-growing stablecoin digital bank globally. The platform allows individuals and businesses to earn a 10% return on digital dollar deposits, make payments using stablecoin-linked cards with Bitcoin cashback, and invest in US stocks as Token , among other features.
The leadership team also Chia Kontigo's goal of helping nearly 5 billion people worldwide access basic financial services. Major institutional investors such as Base and Coinbase Ventures are also backing Kontigo.
Despite attracting considerable attention in a short period, Kontigo has faced skepticism. Some argue that Kontigo is following the old model of the crypto market , which has previously had negative consequences for the entire industry.
Accessing without KYC triggers a warning signal.
Among the advantages highlighted by Kontigo, the most notable is that users worldwide can open accounts and trade USDC or USDT without needing to verify their identity (KYC).
While seemingly simple and convenient at first glance, this method has raised concerns among users and industry experts alike.
KYC regulations are designed to protect financial institutions from malicious activity, requiring identity verification and validation of customer legitimacy .
Without these safeguards, both the financial platform and its users are vulnerable to risks such as fraud, money laundering, or financing of illegal activities.
In the crypto industry, many platforms have suffered significant losses to users due to a lack of KYC standards, resulting in inadequate security protection.
Last week, Do Kwon, co-founder of Terraform Labs, was sentenced to 15 years in prison for a crypto fraud totaling $40 billion. The Terra ecosystem operated with virtually no KYC (Know Your Customer) checks, allowing large sums of money to flow in completely anonymously and unchecked.
When confidence in the system's Algorithmic Stablecoin collapsed, the lack of control further fueled the system's collapse, leading to a lack of transparency in the flow of funds and causing losses for millions. This incident clearly demonstrates what can happen without fundamental safeguards: rapid growth can also lead to large-scale collapses .
The lack of KYC standards isn't the only thing causing concern among many about Kontigo's direction.
The promised profits will test user confidence.
Mr. Castillo stated that the 10% yield from holding USDC is generated through lending activities via DeFi Morpho , investments in US Treasury bonds, and interest-bearing custody services at Coinbase.
However, critics point out that, based on aggregated data from these sources, the actual current return on investment only ranges from 3% to 7% per year, making it difficult to reach the 10% that Kontigo claims.
Many people doubt how Kontigo can maintain a 10% yield. Some suggest the company may be employing high-risk strategies, leverage, or operating in an opaque manner.
In addition, some users have reported that transactions transferring USDC to their wallets have not been recorded even after several hours.
For platforms aiming to Vai as banks or payment infrastructures, even short-term delays in payments can easily erode user trust . Fast and timely payments are a fundamental requirement, regardless of the transaction size.
As Kontigo expands, its long-term reputation will depend not only on its growth rate but also on its practical operations and the trust its users place in it.
In a field already marked by so many failures, Kontigo now faces immense pressure to prove that rapid growth will not repeat the mistakes that have brought down numerous previous crypto projects.
