KAST faces controversy after EtherFi CEO calls out platform over Terms of Service

Crypto neobank KAST faces intense controversy after EtherFi CEO Mike Silagadze publicly criticized its Terms of Service. The dispute reveals that KAST structures stablecoin deposits as sales to the company rather than custodied funds, while capping its total liability to users at just $500. This structure allows KAST to generate yield on user assets, highlighting the risks of custodial payment models compared to non-custodial competitors like EtherFi.

KAST Terms of Service controversy

• ▪KAST updated its Terms of Service on July 7, 2026, to reaffirm that users can redeem unspent balances, though the fundamental framing of deposits as sales remained.
• ▪The crypto neobank KAST faced public backlash after its Terms of Service revealed that user stablecoin deposits are legally structured as sales to the company.

Deposit treated as sale

• ▪KAST structures stablecoin deposits as sales to the company in exchange for a spending balance, allowing KAST to use the assets in its corporate treasury to generate yield.
• ▪Under KAST's Terms of Service, user deposits are legally treated as sales rather than custodied funds, changing the risk calculus for platform users.

Five hundred dollar liability cap

• ▪In the event of KAST's insolvency, hack, or operational failure, users could theoretically be limited to recovering only $500 regardless of their actual balance.
• ▪KAST's Terms of Service limit the company's total liability to users to a maximum of $500.

Points to equity conversion

• ▪KAST pivoted its rewards program from an expected one-to-one points-to-tokens conversion toward tokenized equity, which represents a stake in the company.
• ▪KAST raised $80 million in a Series A funding round in March 2026, reaching a valuation of $600 million and projecting a $100 million annual revenue run rate.

EtherFi CEO public criticism

• ▪EtherFi co-founder and CEO Mike Silagadze publicly criticized KAST around July 5, 2026, calling the platform a 'Kasthole scammer' in a viral post.
• ▪During the public feud with KAST, EtherFi CEO Mike Silagadze's ETHFI token was trading around $0.43.

Custodial versus non-custodial models

• ▪Custodial platforms like KAST offer convenience, whereas non-custodial alternatives like EtherFi's crypto card prioritize user sovereignty and asset control.
• ▪The dispute between KAST and EtherFi highlights the industry tension between custodial payment platforms and non-custodial alternatives.

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