JPMorgan Freezes Accounts of Stablecoin Startups, Here’s Why

JPMorgan freezes accounts linked to two stablecoin startups after internal checks raised concerns about exposure to sanctioned regions. The move affects firms backed by Y Combinator and working through a third-party payments provider.

JPMorgan Freezes Accounts Connected to BlindPay and Kontigo

JPMorgan freezes accounts belonging to BlindPay and Kontigo, two stablecoin startups that operate mainly across Latin America. Both companies are backed by Y Combinator and access banking services through Checkbook, a digital payments company that works with large banks. 

According to the report, the freeze followed reviews that pointed to transactions linked to Venezuela and other areas under United States sanctions.

A JPMorgan spokesperson said the action was not taken because the firm’s deal with stablecoins. The bank stated that it continues to work with stablecoin issuers and related businesses and has supported crypto firms in the past. 

It is worth noting that the decision was described as a compliance issue tied to risk exposure. The accounts were frozen after activity raised red flags under existing banking rules.

Chargebacks and Rapid Growth Added Pressure on Accounts

Another factor behind the decision was a rise in chargebacks linked to the affected firms. Checkbook chief executive PJ Gupta said BlindPay and Kontigo were among several companies connected to a sharp increase in disputes. 

He explained that the issue followed rapid online customer onboarding, which brought in many new users in a short time.

Chargebacks create losses and increase monitoring costs for banks, especially when payments cross borders. When combined with activity tied to high-risk regions, the situation often leads banks to step in. 

JPMorgan responded by closing or freezing accounts linked to those risks. The move came even as JPMorgan and Checkbook continued to grow their business relationship.

Broader Crypto Ties Remain Despite Tighter Controls

The case comes at a time when JPMorgan is expanding some digital asset services while tightening others. The bank has faced criticism from crypto firms before. 

Earlier this year, Gemini co-founder Tyler Winklevoss accused JPMorgan of slowing the exchange’s return to the bank after public disagreements.

At the same time, JPMorgan is considering offering crypto trading products to institutional clients. Interest has grown as rules in the United States become clearer. 

In places like Venezuela, crypto use has increased as people look for alternatives to local currency controls. The account freeze shows how banks are balancing opportunity with strict compliance demands.

In related news, JPMorgan Chase has launched a new tokenized money-market fund on the Ethereum blockchain, marking a significant step in its digital finance strategy.