Brazil central bank liquidates Banco Neon in fintech setback

Brazil’s central bank liquidated small lender Banco Neon SA on May 4 due to a breach of regulations, and suspended operations of an associated tech startup that had raised $22 million in venture capital the day before. Neon Pagamentos SA — a fintech startup that used the infrastructure of Banco Neon to process checking accounts — was not liquidated, the central bank said. However, it was forbidden from opening new accounts and its current users may have their accounts blocked. The intervention underscores a delicate situation for Brazil’s nascent fintechs, which have faced minimal regulation from the central bank in recent years but often rely on the infrastructure of small banks that come under close scrutiny.

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