Paraguay's President Resigns and Is Impeached After Bank Collapse Locks Out Millions

Paraguay's central bank seized Ueno Bank this week after finding it had fallen far short of solvency requirements, freezing the accounts of roughly 3 million customers in a country of about 6.5 million people. By Thursday, the crisis had cost President Santiago Peña his job and triggered his impeachment within minutes of his own resignation.

HOW A FINTECH DARLING BECAME A NATIONAL CRISIS

Ueno Bank started as a niche finance company and grew in under five years into a household name, claiming more than 60% of Paraguay's adults as customers. It offered cash-back deals on groceries, expanded to more than 70 locations, sponsored the national soccer team and put its name on the country's main stadium. Government money followed the growth: as of last month, Ueno reported holding roughly $800 million to $850 million in public funds, including money from the state pension and health fund and from the operators of Paraguay's hydroelectric dams.

Paraguay's central bank intervened this week after determining Ueno had violated limits on loans to related companies and had breached minimum solvency requirements, a finding tied to "adjustments made to its financial statements during the regularization process." Regulators had flagged risky insider lending as far back as June, including nearly $39 million sent to three related companies in a single day in September 2025. Peña had dismissed earlier warnings as a smear campaign.

A CONFLICT OF INTEREST AT THE TOP

Peña's ties to Ueno predate his presidency. He remained a business partner of Grupo Vázquez, the conglomerate that owns Ueno, until March 2025, and soon after taking office in 2023 he appointed Ueno's former chief, Carlos Carvallo, to run the central bank that was supposed to supervise it. Carvallo resigned at Peña's request this week as the scandal widened. Prosecutors have since issued arrest warrants for eight Ueno executives, all of whom have surrendered, and courts have frozen their assets.

RESIGNATION AND IMPEACHMENT IN THE SAME DAY

Peña announced his resignation Thursday, saying he was stepping down for "the stability of our country, social peace and the need to preserve our democratic institutions." Paraguay's Chamber of Deputies voted to impeach him anyway, minutes later, and the case now moves to a Senate trial. Paraguay's Attorney General has opened three separate criminal cases against Peña and other former officials tied to the bank's collapse.

The streets told their own version of the story. Crowds chanted "we want your head, Peña," carried signs branding him "the enemy of savers" and demanded, "give us back our money." Riot police used pepper spray and rubber bullets against the protesters. Each depositor is guaranteed up to 228 million Paraguayan guaraníes, roughly $38,000, from a central bank fund, with payment required within 15 days and a possible one-time 15 day extension. Anyone with savings above that guarantee is waiting on the outcome of a resolution process that has no fixed timeline.

THE LESSON PARAGUAY DIDN'T ASK FOR

For three million people, the money they thought was sitting safely in a bank app disappeared overnight, not because of a hack or a market crash, but because the institution holding it was insolvent and the people meant to catch that were the ones who built it. Retirees, workers and university students are now waiting on a government payout schedule for savings they could access freely a week ago. The bank that sponsored their national soccer team and sat inside their phones is the reason their wages and pensions are stuck in limbo.

This story comes from the Simply Bitcoin Live show. Watch the full episode.