JPMorgan Chase has frozen accounts that stablecoin startups BlindPay and Kontigo used for U.S. banking access after compliance teams flagged flows tied to Venezuela and other restricted markets, according to an exclusive in The Information that payments outlet PYMNTS and others echoed on Friday.
The move hits two Y Combinator backed firms that route USDC and other dollar tokens across Latin America and arrives as large banks reprice the legal cost of touching sanctioned jurisdictions under the new U.S. GENIUS stablecoin law.
JPMorgan stock traded near $328 during Friday’s session, down about 0.4% on the day, while Bitcoin hovered around $87,500 with a drop of roughly 1.2%, a muted tape that framed the freezes as a targeted compliance story rather than a market wide panic.
Sanctions fears or just ugly KYC math
The Information reported that JPMorgan froze accounts for BlindPay and Kontigo in recent months after reviewing activity in Venezuela and other high risk countries that fall under U.S. sanctions or similar restrictions. The startups plugged into the bank through digital payments partner Checkbook, which JPMorgan added to its J.P. Morgan Payments Partner Network in late 2024 for digital check flows.
A JPMorgan spokesperson argued that the bank did not target stablecoins as a product and pointed to other crypto clients.
“This has nothing to do with stablecoin companies. We bank both stablecoin issuers and stablecoin-related businesses, and we recently took a stablecoin issuer public.”
Checkbook CEO PJ Gupta told The Information that BlindPay and Kontigo sat inside a group of clients that suddenly produced a surge in disputed transactions and chargebacks, enough to trip JPMorgan risk limits. He blamed rapid onboarding, saying the firms “opened the floodgates and a bunch of people came in over the internet.”
BlindPay’s own incident report lines up with that picture. In an August blog post titled “Virtual Account Incident,” founder Bernardo Simonassi wrote that the company’s banking partner flagged a jump in reversals on August 19, disabled creation of new virtual accounts a day later, then forced BlindPay to close all existing virtual accounts and wallets by August 26 while processed payments sat on hold at the bank.
The same post describes a scramble to tighten AML policies, add geographical risk checks and update APIs before an internal bank meeting on revised terms, with BlindPay saying it was working “at the highest priority” to restore service and warning clients that payouts would resume only after the bank approved new conditions.
BlindPay’s current documentation now lists Venezuela as a prohibited country alongside Russia, Iran and other sanctioned jurisdictions and warns that any activity from those regions may trigger immediate account cancellations or freezes, with an explicit reference to OFAC sanctions lists.
Who BlindPay and Kontigo serve
BlindPay sells a stablecoin API that lets fintechs and merchants move USDC and other tokens across bank rails, pitching instant global payouts and compliance handled through a single integration, according to its own site at blindpay.app.
Kontigo targets retail and business users directly. Its app markets an international “stable-currency” account that lets customers in Latin America hold USDC, invest in Bitcoin and spend through local stablecoin cards, with claims of more than 1 million downloads and 300,000 users on its homepage and Y Combinator profile.
The Information reported that Kontigo counts as one of two crypto platforms authorized by a Venezuelan regulator and that its founder has said the company processed more than $1 billion in transactions, putting a Venezuelan stablecoin flow directly in the blast radius of U.S. sanctions policy. Kontigo told The Information that past claims it moved money out of Venezuela without identification checks were false and said it had launched legal action against the group that made them, according to PYMNTS.
GENIUS Act, OFAC and a thinner margin for error
The freezes land five months after President Donald Trump signed the GENIUS Act into law, the first U.S. statute that sets nationwide rules for payment stablecoins, including one to one reserve backing, monthly reserve disclosures and explicit compliance with U.S. sanctions and anti money laundering rules.
Legal analysis of the GENIUS Act notes that large payment stablecoin issuers now sit under banking regulators such as the FDIC, OCC and Federal Reserve rather than the SEC or CFTC, while wallets, custodians and payment apps get a three year transition before they can handle only approved payment stablecoins.
That shift gives banks like JPMorgan direct responsibility for policing stablecoin flows that touch their balance sheets. If a partner ignores OFAC lists, runs weak KYC funnels or tolerates out of control chargebacks, the compliance failure now lands on the bank’s doorstep as much as on the startup’s.
JPMorgan already sits in the middle of a separate fight over crypto access to banking. In November, Strike CEO Jack Mallers posted that the bank closed his personal accounts after flagging “concerning activity” and told him staff were “not allowed” to explain the decision, a case that revived talk of Operation Chokepoint 2.0 among Bitcoin advocates.
At the same time, JPMorgan continues to build its own digital money rails through products such as JPM Coin and a proposed deposit token for cross border settlement and it has underwritten a public listing for at least one regulated stablecoin issuer, according to the same spokesperson who insisted the BlindPay and Kontigo freezes were not an attack on stablecoins. Reporting in 2023 already showed the bank preparing deposit token infrastructure for corporate clients.
What changes for stablecoin rails in high risk markets
For BlindPay and Kontigo, the immediate problem is simple. Without a major U.S. bank in the loop, it becomes harder to turn stablecoins into dollars at scale or to accept fiat flows from corporate customers that still pay through traditional rails.
Gupta told The Information that when disputed transactions climb past a set threshold, Checkbook and JPMorgan freeze client accounts first, then reopen them only if both firms gain comfort that the pattern will not repeat. That creates a hard line for any stablecoin startup that wants to use the same network for payment flows out of high risk countries.
BlindPay wrote in August that it expected its banking partner to restore service in stages starting with U.S. companies and individuals once new terms were in place and that its team was working “side by side with the bank” to make that happen. The company has not published a new statement since The Information story surfaced, and Kontigo has limited its public response to denying past claims of ID free flows and pursuing legal action against its accuser.
For other stablecoin projects that want to serve users in sanctioned or high risk markets, the message is direct. U.S. banks will still bank crypto firms, but they will control the off ramp and they will hit the kill switch fast if sanctions or KYC gaps show up in the data.
