Paraguay’s $BTC ‘Not Your Keys’ Moment Becomes a National Political Crisis

Paraguayan President Santiago Peña resigned Thursday after the collapse of digital lender Ueno Bank locked roughly three million customers out of their accounts, and the lower house immediately voted 78-0 to impeach him. Ueno claimed around 2.9 million customers, more than 60% of Paraguay’s adults, while the bank held $800 million to $850 million in public-sector deposits, including state pension and health funds. Vice President Pedro Alliana is next in line to succeed Peña, whose five-year term was scheduled to end in 2028, if Congress accepts his resignation.

“The collapse of Ueno Bank has triggered a severe financial and political crisis,” Peña said in his resignation address. “My greatest wish is that the return of those funds be guaranteed, that the Deposit Guarantee Fund fulfill its purpose.” The central bank placed Ueno into resolution on Nov. 3 after finding its solvency ratio had fallen below half the regulatory minimum, leaving its app, cards and transfers out of service. It described the failure as an isolated case and announced deposit guarantees of up to 228.3 million guaraníes per depositor, roughly $36,000, with initial payments targeted at eligible accounts holding no more than 10 million guaraníes.

The fallout drew thousands of protesters to Asunción, where savers burned debit and credit cards outside Ueno’s headquarters. Paraguayo “Payo” Cubas, a former presidential candidate, was booed, shoved and forced out as protesters called him “divisor” and “oportunista.” Protester Luis Pineda said, “Santiago Peña and the Colorado Party have stolen all our savings. We are fed up with 70 years of plunder.” Peña, a shareholder in Ueno’s holding company until March 2025, has denied wrongdoing and said the issue began as a regulatory matter before becoming a political dispute.

Congress was already considering alleged conflicts of interest, misuse of pension funds and institutional cover-ups when Peña resigned. A joint session called to accept the resignation adjourned without a quorum, after which Peña said he would face impeachment and defend himself. The Senate rejected his request for 72 extra hours to prepare and planned a removal vote for Friday night. Colorado Party leader Horacio Cartes withdrew his support for Peña, declaring, “We will not be on the side of the plunder of public, private and retirees’ funds.” Interior Minister Enrique Riera and central bank president Carlos Carvallo also resigned, while eight Ueno executives were arrested and prosecutors opened a criminal investigation into Peña’s possible responsibility for the bank’s irregularities, which he denies.

The crisis also drew attention to the crypto principle “not your keys, not your coins”: $BTC held in a self-custodied wallet can be authorized without an intermediary, unlike funds dependent on a bank’s access, although self-custody carries its own risks. On Bybit’s Paraguay-facing peer-to-peer marketplace, one listing offered Tether’s USDt at 6,942 Paraguayan guaraníes, approximately 13% above the central bank’s Nov. 4 dollar reference rate of 6,144.02 guaraníes per US dollar.